Resale Value Garland Mills purchased a certain piece of machinery 2 years ago for $500,000. Its present resale value is $420,000. Assuming that the machine's resale value decreases exponentially, what will it be (in dollars) 4 years from now? (Round your answer to the nearest dollar.)

The value decreases by 40,000 per year (500000-42000/2 years) the value will decrease by 240000 in six (4 years plus 2 years already passed) years. 6 x 40,000 =240000

So, the value should be 260,000 (500000-240000)

Or

year 1 500000-40000=460000

year 2 460000-40000=420000

year 3 420000-40000=380000

year 4 380000-40000=340000

year 5 340000-40000=300000

year 6 300000-40000=260000

AFOKE88 AFOKE88 · Answer 2 · 2022-04-21T13:12:03+02:00

The machine's resale value Garland Mills purchased in 4 years from now will be; $353,049

What is the future value amount?

We are told that the machines present resale value is $420000. Now formula for future value is;

Future value = present value * exp(cx)

Thus;

$420,000 = $500,000 * exp(2c)

420000/500000 = exp(4c)

2c = In(420000/500000)

c = -0.087

Future value = present value * exp(cx)

Future value = $500,000 * exp(-0.087 * 4)

Future value = $353,049

Therefore, the machine's resale value in 4 years from now will be $353,049

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