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Name:

Date: Applications of Integration

Future Value of an Account 1. Suppose that your grandparents opened a savings account for your education and said that every year they would add $1,000 to the account. How much money will be in the account after 10 years?

Another way to represent this is by graphing the constant function y = 1000 on the interval 0 < x < 10 and finding the area under the curve (area of a rectangle). To Graph: a. From the start menu (m) select (W). b. Type 1000 after y1 with the soft keyboard (k) then press E. c. Tap $ to graph the function. d. Tap 6 & change xmax to 15 & ymax to 1100. Tap OK. e. Tap Analysis/G-Solve/ dx f. Tap 0 (zero) & input upper bound to be 10. Tap OK. Suppose you invest a variable amount of money into an account at a continuous rate, and you want to know the future value of the account if it is compounded continuously at a certain rate. As the interval of time t 0 we end up with an infinite sum of rectangles. The area under the curve represents the future value of the account:

The formula for this is given by:

FV = f (t )e
0

r (T t )

dt = e

rt

f (t )e
0

rt

dt

2. Suppose you invest f(t) = $3.3 million a year in an account returning 8.5% APR. Assuming a continuous income stream and continuous compounding of interest, how much will these investments be worth 10 years from now? Write the integral to be evaluated, then enter it into the ClassPad.

FV =
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i. Tap M & select Edit/Clear All (yes, you are sure) ii. Toggle the k, tap ) then -P & enter all parts of the integral iv. Tap E. (Screen Shots on the next page)

3. When your first child is born, you begin to save for college by depositing $300 per month in an account paying 12% interest per year. With a continuous stream of investment and continuous compounding, how much will you have accumulated in the account by the time your child enters college 18 years later? (Write the integral to be evaluated then enter it into the ClassPad.)

FV =

4. Consider the same situation as in #3 except now you increase the $300 per month by 1% per year. With a continuous stream of investment and continuous compounding, how much will you have accumulated in the account by the time your child enters college 18 years later? i. Write down the integral first, then evaluate on the ClassPad ii. On the ClassPad Select the previous line & let go iii. Tap selection, then drag & drop to the next line! Change the numbers & tap E.

FV =

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Probability Density Function 5. It has been determined that the probability density function for the wait in line at a counter is given by: 0 t if _ t < 0 f (t ) = 10 if _ t 0 .1 e where t is the number of minutes spent waiting in line. Determine the mean (avg) time spent waiting in line? The mean is given by: =

x f ( x)dx

Write down the integral and then evaluate it on the ClassPad. What are the units on the results?

=
Profit function in terms of Revenue & Cost functions. 6. The profit function (in tens of thousands of dollars) at a production level of x items, is given by P( x) = R( x) C ( x) .

The marketing & finance departments of your computer corporation have determined that R ( x) =
C ( x) = x where x stands for dozens of computers produced. a. Determine the amount of computers you need to produce and sell to start making a profit? i. From the start menu (m) select (W). Select Edit/Clear All (yes, you are sure) ii. Input R(x) & C(x) after y1 and y2 respectively. Tap E after each entry. iii. Tap $ to graph the functions. Select Zoom/Quick Initialize. iv. Tap Analysis/G-Solve/Intersect v. Use cursor arrows to determine the x value at which the revenue function becomes greater.

1 2 x and 2

x _________ computers As the production level increases the profit is given by the integral of the difference of R(x) & C(x). b. Find the amount of profit that you would make if you produced and sold half a dozen computers (x = .5) i. Tap after y3 & input .5 x 2 x . Tap E ii. Uncheck y1& y2. iii. Tap $ to graph the function. iv. Select Analysis/G-Solve/ dx v. Tap 0 (zero) & .5 for upper & lower limits & tap OK. What is the profit in dollars? Explain why it is negative?

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