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In the previous review, we examined exponential growth. Any process in which a

quantity grows by a fixed percentage each year (or each day, hour, etc.) can be modeled

by an exponential function. Compound interest is a good example of such a process.

If you put money in a savings account, then the bank will pay you interest (a percentage

of your account balance) at the end of each time period, typically one month or one

day. For example, if the time period is one month, this process is called monthly

compounding. The term compounding refers to the fact that interest is added to your

account each month and then in subsequent months you earn interest on the interest.

If the time period is one day, its called daily compounding. The exponential model

that describes this situation is called the discrete compound interest formula.

If P0 is the principal, r is the annual interest rate, and n is the number of times

that interest is compounded per year, then the balance at time t years is

r nt

P (t) = P0 1 + . (6.1)

n

I Example 1

If the principal is $100, the annual interest rate is 5%, and interest is compounded

daily, what will be the balance after ten years?

.05 36510

P (10) = 100 1 + 164.87

365

Thus, you would have $164.87 after ten years. Note that the final calculation was done

using a calculator.

I Example 2

If the principal is $10 000, the annual interest rate is 5%, and interest is compounded

daily, what will be the balance after forty years?

.05 36540

P (40) = 10 000 1 + 73 880.44

365

1

Copyrighted material. See: http://msenux.redwoods.edu/IntAlgText/

2 Chapter 6

Thus, you would have $73 880.44 after forty years. Note that the final calculation was

done using a calculator.

If we start with the discrete compound interest formula (6.1) and let the number

of times compounded per year (n) approach , then we end up with what is known as

continuous compounding.

continuously, then the balance at time t years is

P (t) = P0 ert . (6.2)

Note that you will again need a calculator to do the final evaluation on the following

problems.

I Example 3

If the principal is $100, the annual interest rate is 5%, and interest is compounded

continuously, what will be the balance after ten years?

P (10) = 100e(0.05)(10)

Use your calculator to approximate this result. Thus, you would have $164.87 after ten

years.

I Example 4

If the principal is $10,000, the annual interest rate is 5%, and interest is compounded

continuously, what will be the balance after forty years?

Properties of Logarithms;

Solving Exponential Equations

The usefulness of logarithms in calculations is based on the following three important

properties, known generally as the properties of logarithms.

Section 6.3 Applications of Exponential Functions 3

Properties of Logarithms

M

b) logb = logb (M ) logb (N )

N

c) logb (M r ) = r logb (M )

logb (x)

loga (x) =

logb (a)

I Example 5

Before applying the Change of Base Formula, lets see if we can estimate the value of

log2 (5). First recall that 2log2 (5) = 5. Now how large would the exponent on a base

of 2 need to be for the power to equal 5? Since 22 = 4 (too small) and 23 = 8 (too

large), we should expect log2 (5) to lie somewhere between 2 and 3. Indeed, applying

the Change of Base Formula with the common logarithm yields

log10 (5) log(5) .6989700043

log2 (5) = = 2.321928095.

log10 (2) log(2) .3010299957

According to the formula, we could instead use the natural logarithm to obtain the

same answer, as in

loge (5) ln(5) 1.609437912

log2 (5) = = 2.321928095.

loge (2) ln(2) .6931471806

Property (c) (logb (M r ) = r logb (M )) is also used extensively to help solve exponential

equations, and thus will be an important tool when we work with applications. In

general terms, the main strategy for solving exponential equations is to (1) first isolate

the exponential, then (2) apply a logarithmic function to both sides, and then (3) use

property (c). Well illustrate the strategy with several examples.

I Example 6

Solve 8 = 5(3x ).

4 Chapter 6

First isolate the exponential function on one side of the equation by dividing both sides

by 5:

1.6 = 3x

Then take the logarithm of both sides. Use either the common or natural log:

log(1.6) = log(3x )

Now use property (c) to move the exponent in front of the log on the right side:

log(1.6) = x log(3)

log(1.6)

=x

log(3)

log(1.6)

Thus, the exact value of x is , and the approximate value is 0.42781574.

log(3)

If the base of the exponential is either 10 or e, the correct choice of logarithm leads

to a faster solution:

I Example 7

Solve 3 = 4ex .

3 = 4ex

= 0.75 = ex isolate the exponential

x

= ln(0.75) = ln(e ) apply the natural log function

= ln(0.75) = x since ln(ex ) = x

= x .2876820725

In this case, because the base of the exponential function is e, the use of the natural

log function simplifies the solution.

Exponential Growth Models

We so far have used exponential functions to model the growth of money. But we can

use the exact same analysis for quantities other than money. If P (t) represents the

amount of some quantity at time t years, and if P (t) grows at an annual rate r with

the growth continually added in, then we can conclude in the same manner that P (t)

must have the form

Section 6.3 Applications of Exponential Functions 5

Exponential Growth

If a function P (t) grows continually at a rate r > 0, then P (t) has the form

where P0 is the initial amount P (0). In this case, the quantity P (t) is said to

exhibit exponential growth, and r is the growth rate.

We will now examine the role of exponential growth functions in some real-world ap-

plications. In the following examples, assume that the population is modeled by an

exponential growth function as in formula (6.4).

I Example 8

Suppose that the population of a certain country grows at an annual rate of 2%. If the

current population is 3 million, what will the population be in 10 years?

This is a future value problem. If we measure population in millions and time in years,

then P (t) = P0 ert with P0 = 3 and r = 0.02. Inserting these particular values into

formula (6.4), we obtain

P (t) = 3e0.02t .

I Example 9

In the same country as in Example 8, how long will it take the population to reach 5

million?

As before,

P (t) = 3e0.02t .

Now we want to know when the future value P (t) of the population at some time t will

equal 5 million. Therefore, we need to solve the equation P (t) = 5 for time t, which

leads to the exponential equation

5 = 3e0.02t .

Using the procedure for solving exponential equations that was presented in Section

8.6,

6 Chapter 6

5 = 3e0.02t

5

= = e0.02t isolate the exponential

3

5

= ln = ln(e0.02t ) apply the natural log function

3

5

= ln = 0.02t since ln(ex ) = x

3

ln 53

= =t division

0.02

= t 25.54128.

Thus, it would take about 25.54 years for the population to reach 5 million.

examples.

I Example 10

P (t) = 100e0.15t ,

where the size P (t) is measured in grams and time t is measured in hours. How long

will it take for the culture to double in size?

The initial size is P0 = 100 grams, so we want to know when the future value P (t) at

some time t will equal 200. Therefore, we need to solve the equation P (t) = 200 for

time t, which leads to the exponential equation

200 = 100e0.15t .

200 = 100e0.15t

= 2 = e0.15t isolate the exponential

= ln(2) = ln(e0.15t ) apply the natural log function

= ln(2) = 0.15t since ln(ex ) = x

ln(2)

= =t division

0.15

= t 4.620981.

Thus, it would take about 4.62 hours for the size to double.

Section 6.3 Applications of Exponential Functions 7

Weve observed that if a quantity increases continually at a rate r, then it is modeled

by a function of the form P (t) = P0 ert . But what if a quantity decreases instead? The

only difference is that the growth rate r in the formulas must be replaced by r since

the quantity is decreasing.

Exponential Decay

If a function P (t) decreases continually at a rate r > 0, then P (t) has the form

where P0 is the initial amount P (0). In this case, the quantity P (t) is said to

exhibit exponential decay, and r is the decay rate.

The main example of exponential decay is radioactive decay. Radioactive elements and

isotopes spontaneously emit subatomic particles, and this process gradually changes

the substance into a different isotope. For example, the radioactive isotope Uranium-

238 eventually decays into the stable isotope Lead-206. This is a random process for

individual atoms, but overall the mass of the substance decreases according to the

exponential decay formula (6.5).

I Example 11

Suppose that a certain radioactive element has an annual decay rate of 10%. Starting

with a 200 gram sample of the element, how many grams will be left in 3 years?

This is a future value problem. If we measuring size in grams and time in years, then

P (t) = P0 ert with P0 = 200 and r = 0.10. Inserting these particular values into

formula (6.5), we obtain

P (t) = 200e0.10t .

I Example 12

Using the same element as in Example 11, if a particular sample of the element decays

to 50 grams after 5 years, how big was the original sample?

This is a present value problem, where the unknown is the initial amount P0 . As before,

r = 0.10, so

P (t) = P0 e0.10t .

8 Chapter 6

50 = P (5) = P0 e(0.10)(5) .

50

(0.10)(5)

= P0

e

Finish by calculating the value of the left side to get P0 82.43606 grams.

I Example 13

Suppose that a certain radioactive isotope has an annual decay rate of 5%. How many

years will it take for a 100 gram sample to decay to 40 grams?

P (t) = 100e0.05t .

Now we want to know when the future value P (t) of the size of the sample at some

time t will equal 40. Therefore, we need to solve the equation P (t) = 40 for time t,

which leads to the exponential equation

40 = 100e0.05t .

Using the procedure for solving exponential equations that was presented in Section

8.6,

40 = 100e0.05t

= 0.4 = e0.05t isolate the exponential

= ln(0.4) = ln(e0.05t ) apply the natural log function

= ln(0.4) = 0.05t since ln(ex ) = x

ln(0.4)

= =t division

0.05

= t 18.32581.

Thus, it would take approximately 18.33 years for the sample to decay to 40 grams.

We saw earlier that exponential growth processes have a fixed doubling time. Sim-

ilarly, exponential decay processes have a fixed half-life, the time in which one-half the

original amount decays.

I Example 14

Using the same element as in Example 13, what is the half-life of the element?

As before, r = 0.05, so

P (t) = P0 e0.05t .

Section 6.3 Applications of Exponential Functions 9

The initial size is P0 grams, so we want to know when the future value P (t) at some

time t will equal one-half the initial amount, P0 /2. Therefore, we need to solve the

equation P (t) = P0 /2 for time t, which leads to the exponential equation

P0

= P0 e0.05t .

2

Using the same procedure as in the last example,

P0

= P0 e0.05t

2

1

= = e0.05t isolate the exponential

2

1

= ln = ln(e0.05t ) apply the natural log function

2

1

= ln = 0.05t since ln(ex ) = x

2

ln 12

= =t division

0.05

= t 13.86294.

The process of radioactive decay also forms the basis of the carbon-14 dating tech-

nique. The Earths atmosphere contains a tiny amount of the radioactive isotope

carbon-14, and therefore plants and animals also contain some carbon-14 due to their

interaction with the atmosphere. However, this interaction ends when a plant or ani-

mal dies, so the carbon-14 begins to decay (the decay rate is 0.012%). By comparing

the amount of carbon-14 in a bone, for example, with the normal amount in a living

animal, scientists can compute the age of the bone.

I Example 15

Suppose that only 1.5% of the normal amount of carbon-14 remains in a fragment of

bone. How old is the bone?

P (t) = P0 e0.00012t .

The initial size is P0 grams, so we want to know when the future value P (t) at some

time t will equal 1.5% of the initial amount, 0.015P0 . Therefore, we need to solve the

equation P (t) = 0.015P0 for time t, which leads to the exponential equation

0.015P0 = P0 e0.00012t .

10 Chapter 6

0.015P0 = P0 e0.00012t

= 0.015 = e0.00012t isolate the exponential

0.00012t

= ln (0.015) = ln(e ) apply the natural log function

= ln (0.015) = 0.00012t since ln(ex ) = x

ln (0.015)

= =t division

0.00012

= t 34998.

While the carbon-14 technique only works on plants and animals, there are other

similar dating techniques, using other radioactive isotopes, that are used to date rocks

and other inorganic matter.

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