Question

The value of a $1200 computer decreases 2.7% annually.

A. Write an equation that gives the price(y) of the computer in x years.

B. What will the value of the computer be after 3 years?

Answer 1

The equation is y=1200(1-0.027)ˣ, which can also be written as y=1200(0.973)ˣ.
The computer will be worth $1105.40 after 3 years.

Exponential equations are written in the form y=abˣ, where b=1+r (rate of increase or decrease as a decimal number) and a is the initial amount.  The initial amount of the computer is 1200, and the rate of decrease is 2.7, so -0.027.  Putting 3 in for the exponent (number of years) we get:

y=1200(0.973)³=1105.40.