Vladimir bought a car for $250000$ USD. He has two models to describe the car's loss of value.
Model 1: $y=250000-25000x$.
Model 2: $y=250000 \cdot 0.8^x$
where $y$ is the cost and $x$ is the amount of years that have passed since the purchase. What are the differences between the models?
I know that there is a difference when it comes to the $\%$ amount changes, but are there more key differences?
The model-1 says, the value of the thing will go down 10% of the original value each year.
The model-2 says, the value of the thing will go down 20% of the current value each year.
It implies that,
The model-1 says, the value of the thing will be none after 10 years.
The model-2 says, the value of the thing will go down much faster than model-1 in the beginning, but will slow down later and the thing will not be a piece of junk in many years since its original value is so high.