3 Exponential decrease

Consider the value, £ D , of a car subject to depreciation, in terms of the age A years of the car. The car was bought for £ 10500 . The function

D = 10500 e 0.25 A ( 0 A 6 )

could be considered appropriate on the ground that

  1. D had a fixed value of £ 10500 when

    A = 0,

  2. D decreases as A increases and
  3. D decreases faster when A is small than when A is large. A plot of this function is shown in Figure 8.

    Figure 8 :

    { Plot of car depreciation over 6 years}

Task!

Produce the linearised model of D = 10500 e 0.25 A .

ln D = ln 10500 + ln ( e 0.25 A )

so ln D = ln 10500 0.25 A