The following function represents the value of a truck, in dollars, after x years: f(x) = 29,000(0.88)x

What does 0.88 represent?

The decrease in the value of the truck, which is 12%
The present value of the truck
The value of the truck after x years
The decrease in the value of the truck, which is 88%

The increase in the value of the truck, which is 88%

Step-by-step explanation:

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

Rate of return can be defined as the percentage of interest or dividends earned on money that is invested.

In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.

Basically, the rate of return which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.

Given the following function;

f(x) = 29,000(0.88)x

Where;

x is the number of years.

We can deduce from the function, that the rate at which the truck is appreciating is 88% (0.88).

Assuming x = 3

f(3) = 29,000(0.88)*3

f(3) = $76,560