The initial value is the initial profits of the company, so:
Answer a: $25,000
The decay factor is the percentage in what the profits have been decreasing, so:
Answer b: 6% or 0.06
Finally, the profits every year can be calculated as:
[tex]\begin{gathered} \text{profits}=InitialValue(1-0.06)^t \\ \text{Profits}=25,000(1-0.06)^8 \\ \text{Profits}=25,000(0.609) \\ \text{Profits}=15,239 \end{gathered}[/tex]Answer c: $15,239
