The 2010 Lexus LS costs 64,680. Suppose that car depreciates the total of 42% during first 5 years.
a.) Assume depreciation is exponential. Determine the formula for value of car at time t.
b.) Assume instead that depreciation is linear. Determine the formula for value of car at time t.
c.) If this were your car and you were trading it in after four years, which depreciation model would you prefer (exponential or linear)?