College

Using the equation [tex]y = 20000(0.95)^x[/tex], predict the purchasing power of [tex]\$20,000[/tex] ten years later.

A. [tex]\$10,255[/tex]
B. [tex]\$11,975[/tex]
C. [tex]\$12,635[/tex]
D. [tex]\$14,560[/tex]

Answer :

Sure! Let's work through the problem step-by-step to find the purchasing power of [tex]$20,000 after ten years using the equation \( y = 20000(0.95)^x \).

1. Understand the equation: This equation represents how the purchasing power decreases over time. The value of \( y \) is the purchasing power after \( x \) years, and in this case, it starts at $[/tex]20,000 and decreases by a factor of 0.95 each year.

2. Identify the values:
- Initial amount: [tex]$20,000
- Depreciation rate per year: 0.95
- Number of years (x): 10

3. Plug in the values into the equation:
\[
y = 20000 \times (0.95)^{10}
\]

4. Calculate:
- First, compute \( (0.95)^{10} \). This determines how much a single dollar is worth after ten years.
- Next, multiply this result by $[/tex]20,000 to get the purchasing power after ten years.

5. Result: Once you perform the calculations, you find that the purchasing power is approximately [tex]$11,975.

Therefore, the purchasing power of $[/tex]20,000 ten years later is predicted to be $11,975.