A bakery buys a commercial oven for $5,000 It depreciates at a rate of 15% annually. Use the exponential depreciation formula to calculate its value after 3 years. The exponential depreciation formula is y=A(1−r)^x
Answer
A
3 dollars comma 070 point 6 3
B
3 dollars comma 657 point 0 0
C
3 dollars comma 617 point 2 5
D
3 dollars comma 250 point 7 5
Explanation
Use y = A(1 − r)^x with A = 5,000, r = 0.15, and x = 3. Then y = 5,000(0.85)^3 = $3,070.625, which rounds to $3,070.63, the choice stating $3,070.63.
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