Repeated growth, depreciation and reverse models

Repeated growth, depreciation and reverse models

TGM Original — E Math Summary Notes (4052), 2026 editorial manuscript

For the same percentage change each period, multiply by the same factor repeatedly. Depreciation of \(r\%\) per year gives \(A=P\left(1-\dfrac r{100}\right)^n\), assuming a constant rate and no other changes.

Example

A machine worth \(\$5000\) depreciates by \(12\%\) each year. After \(2\) years its value is \(5000(0.88)^2=\$3872\).

If only the final value and the rates were known, recover the original as \(\dfrac{3872}{0.88^2}=\$5000\).

To find how many whole years a balance takes to pass a threshold, calculate successive yearly balances until the first one meets it, and check the preceding year. Use the discrete periods specified by the question.

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