Percentage Decay Rate Calculator
What is a Percentage Decay Rate?
A percentage decay rate represents the consistent proportional decrease of a value over a specific period of time. Unlike linear reduction, where a fixed amount is removed every step, exponential decay involves removing a fixed percentage of the remaining value. This concept is fundamental in physics (radioactive half-life), finance (asset depreciation), and biology (medicine metabolization).
The Exponential Decay Formula
To find the percentage decay rate per time period, we use the following mathematical formula:
r = 1 – (Nt / N0)(1/t)
Where:
- r is the decay rate (multiply by 100 for percentage).
- N0 is the initial starting quantity.
- Nt is the final quantity after time has passed.
- t is the total number of time periods elapsed.
Real-World Example
Imagine a piece of machinery is purchased for 10,000 units. After 5 years, its value has dropped to 4,000 units. To find the annual percentage decay rate (depreciation):
- Initial Value (N0): 10,000
- Final Value (Nt): 4,000
- Time (t): 5 years
- Calculation: r = 1 – (4,000 / 10,000)(1/5)
- Result: r ≈ 0.1674 or 16.74% per year.
Common Applications
- Pharmacology: Calculating how fast a drug leaves the bloodstream.
- Environmental Science: Measuring the rate of deforestation or population decline in endangered species.
- Data Science: Applying "decay" to historical data to give more weight to recent events in machine learning models.
- Retail: Estimating the rate at which inventory loses value or appeal over time.