A certain piece of machinery was purchased 2 year(s) ago by Garland Mills for $500,000. Its present resale value is $320,000. Assuming that the machine's resale value decreases exponentially, what will it be 2 year(s) from now?
A) The resale value of the machinery will be $204,800
B) The resale value of the machinery will be $205,911
C) The resale value of the machinery will be $204,789
D) The resale value of the machinery will be $204,911

Question

A certain piece of machinery was purchased 2 year(s) ago by Garland Mills for $500,000. Its present resale value is $320,000. Assuming that the machine's resale value decreases exponentially, what will it be 2 year(s) from now? ​
A) The resale value of the machinery will be $204,800
B) The resale value of the machinery will be $205,911
C) The resale value of the machinery will be $204,789
D) The resale value of the machinery will be $204,911

Quizplus · Accepted Answer

The resale value decreases exponentially, meaning it decreases by a constant percentage each year. In 2 years, the value decreased from $500,000 to $320,000, which is a decrease to 64% of its original value (320,000 / 500,000 = 0.64). Assuming the same rate of decrease, 2 years from now, the value will be 64% of $320,000, which is $204,800 (320,000 * 0.64 = 204,800).

A Certain Piece of Machinery Was Purchased 2 Year(s) Ago