C HAPTER

16

Compound interest:
exponential growth and
decay

16.2 Compound interest

Exercises 16.1
1

How much total interest is paid on an investment of $30 000 for 5 years if the interest rate
of 6% is paid:
a annually?
b monthly?
c daily?

A person borrows $5000 for 30 weeks at a compound interest rate of 2% per fortnight. How
much money will he have to repay at the end of the 30 weeks if the interest is compounded:
a each fortnight?
b daily?

What is the interest rate required in order that an investment will double in 10 years if the
interest is paid:
a annually?
b daily?

How much money, to the nearest dollar, would a person have to invest for 3 years in order
to obtain a total interest of $1000 if he pays compound interest of 4% p.a.:
a compounded annually?
b compounded daily?

16.3 Exponential growth

Exercises 16.2
1

What is the difference between the total interest paid on an investment of $5000 for 4 years
at a compound interest rate of 6.5% p.a. paid continuously and the same investment with the
interest paid daily? (State the answer to the nearest cent.)

What interest rate per annum is required for an investment to double itself in 9 years if the
interest is paid continuously? (State the answer correct to 3 significant figures.)

Exercises 16.3
1

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When an iron casting 750C above room temperature is removed from an oven, it cools
exponentially at a rate of 3.00% per minute. How high above room temperature will it be
after:
a 10 minutes?
b 1 hour?
c 2 hours?
d 3 hours?

CD Supplement to accompany Mathematics for Technicians

The mass of a bacterial culture grows exponentially from 1.836 g to 3.274 g during a period
of 8 hours. What will be its mass at the end of a further 24 hours? (State the result correct
to 4 significant figures.)

A tank contains 145 L of water. When a tap at the bottom of the tank is opened, at any
instant water flows out at a rate that is proportional to the volume of water in the tank at
that instant.
a Given that 3.86 L flow out during the first 2 minutes after opening the tap, how much
water will remain in the tank 5 minutes after the tap is opened?
b Starting with the 145 L in the tank, for how long must the tap be opened for 120 L to
run out?
State the answers correct to 3 significant figures.

16.4 Graphs of exponential functions

Exercises 16.4
1

Draw sketch-graphs of the following functions:

14x
a y
8e , for 0 x 0.15
500t
b v
12e
volts, where t is in seconds
3.5x
c y
80(1  e
)

When power is connected to an electrically driven flywheel, its rotational speed after
t seconds is given by v
8(1  e0.5t) revs/s, where t is in seconds. Sketch a graph
showing its approximate speed during the first 5 seconds.

Chapter 16 Compound Interest: Exponential Growth and Decay

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