Question 2
Determine whether the growth (or decay) is linear or exponential, and answer the associated question.
The price of computer memory is decreasing at a rate of $ 10 \% $ per year. If a memory chip costs $ \$ 79 $ today, what will it cost in two years?
Exponential; $ \$ 71.30 $
Linear; $ \$ 94.80 $
Linear; $ \$ 63.20 $
Exponential; $ \$ 63.99 $

Answer

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Answer

3. Calculate the price: $ P(2) = 79(0.9)^2 \approx \$ 63.99 $

Steps

Step 1 ：1. Exponential decay formula: $ P(t) = P_0(1 - r)^t $

Step 2 ：2. Substitute given values: $ P(2) = 79(1 - 0.10)^2 $

Step 3 ：3. Calculate the price: $ P(2) = 79(0.9)^2 \approx \$ 63.99 $