SAT Mathematics Practice Test 4

According to the analyst’s estimate, the value V, in dollars, of the stock will decrease by 28% each week for t weeks, where t = 1, 2, or 3, with its value being given by the formula V=360(r)t. This equation is an example of exponential decay. A stock losing 28% of its value each week is the same as the stock’s value decreasing to 72% of its value from the previous week, since V−(.28)V=(.72)V. Using this information, after 1 week the value, in dollars, of the stock will be V=360(.72); after 2 weeks the value of the stock will be V=360(.72)(.72)=360(.72)2; and after 3 weeks 1 the value of the stock will be V=360(.72)(.72(.72)=360(.72)3.For all of the values of t in question, namely t=1,2, and 3, the equation V=360(.72)t is true. Therefore, the analyst should use .72 as the value of r.