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Home > A2C > Chapter 7 > Lesson 7.2.4 > Problem 7-138

  1. Car driving past signs demonstrating the decrease in value. A rule-of-thumb used by car dealers is that the trade-in value of a car decreases by 20% of its value each year. Homework Help ✎

    1. Explain how the phrase “decreases by 20% of its value each year” tells you that the trade-in value varies exponentially with time (i.e., can be represented by an exponential function).

    2. Suppose the initial value of your car is $23,500. Write an equation expressing the trade-in value of your car as a function of the number of years from now.

    3. How much will your car be worth in four years?

    4. In how many years will the trade-in value of your car be $6000?

    5. If your car is really 2.7 years old now, what was its trade-in value when it was new?

'Decreases by 20%' means that you multiply by 0.8 each year. A sequence with a multiplier is geometric and has an exponential rule.

y = 23500(0.8)x

Use the equation that you found in part (b).

6000 = 23500(0.8)x

Divide by 23,500 first then take the log of both sides.

You are solving for A, which is 23,500 in part (b). The current price will be $23,500, and x will be 2.7.
Your answer should be larger than $23,500.