Question

if a delorian was worth 25,000 in 1985 and it appreciates in value 1.25% every year, how much was it worth in 1955

Answer 1

Steps

So for this, we will create an equation using the exponential growth formula - which is $y=ab^x$ , where a = initial value and b = growth/decay

So for this problem, let year 1985 be the initial year. Since it's the initial year, 25000 is our a variable.

Now, since the value is appreciating, or increasing, we will add 1 and 0.0125 (1.25% in decimal form) together:

• 1 + 0.0125 = 1.0125

1.0125 is our b variable.

Now with our info, our equation is: $y=25000(1.0125)^x$

Now, since 1955 is 30 years before 1985, plug -30 into the x variable and solve as such:

$y=25000*(1.0125)^{-30}\\y\approx 17222.22$

Answer

In short, the value of the item was $17,222.22 in year 1955.