The equation given is \( y = 4,060(1 - 0.05)^t \).
In this equation, the term \( 1 - 0.05 \) indicates that the population is reducing by a factor of \( 0.05 \) (or 5%) each time period \( t \). Specifically, the equation can be interpreted as the population is reduced by 5% of its current value each time period.
Therefore, the correct representation for the rate of decay of the species is:
Option #3: The rate of decay is 5%.