Anisa Madey

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Exponential Functions That Use e or ln(x)

The number e is a very important rational number in math. Its approximate value is ≈
2.718. It is a mathematical constant so no matter what equation it is in, it remains the same
value. The value of (1 + 1/n)​n​ approaches ​e​ as n gets bigger and bigger:

This is true because as the input value of n gets bigger and bigger, its overall effect on the
output value of the entire equation gets smaller and smaller. For example, if you look at the
table of values about, you can see that the difference between n=1 and n=2 is 0.25 and the
difference between n=10,000 and n=100,000 is 0.00012. The difference between n=100,000
and n=1,000,000 would be even less substantial. As the value of n gets bigger, you can see that
the output value gets closer to the true value of e.

The limit definition of e is:

e = lim (1 + 1n )n
n→∞

This limit is also commonly written as:

er = lim (1 + nr )n
n→∞

This limit variation is used when e has an exponent on it. The variable r represents this
exponent. If the equation is representing decay, r will be a negative number. If it’s representing
growth, r will be a positive number.
The number e also relates to the compound interest formula. If n is a finite number, then the
equation will be:

A = p(1 + nr ) nt

A = the final amount of money

p = initial amount of money
r = annual interest rate
n = the number of times compounded per year (this is how many times they look at your
account, calculate how much interest is owed, and then deposit that amount onto your account).
t = the time (years)

If n is an infinite number, the interest is being compounded continuously and the equation is:

A = p(1 + nr )nt

since, er = (1 + nr )n we can replace that part of the equation above with​ er . ​So the
simplified equation will be:

A = P ert
The graph of​ ex has only one ordered pair with both numbers being integers: (0,1).

The inverse function of​ ex is ln(x). These are the steps to solve for it:
Since log e (x) i​s equal to ln(x), this is the inverse equation in its simplified form. The graph of
ln(x) also has only one ordered pair where both numbers are integers: (1,0)

The generic formula for continuous exponential growth and decay (not related to finances or
interest) is:

y = Aekx

y = the final output

A = the initial amount
e = 2.171828
k = constant of proportionality
x = the time (years)

(If the equation is for continuous exponential decay, the k value will be negative.)

This is how to solve equations using the number e and ln(x):

Example 1: Suppose you had the problem: 8e 6−x = 40

The first thing you would do is divide by 8 on both sides. This would leave you:
e6−x = 5

Then you would use a logarithm so that the exponent will be on the right side of the equation
and you can solve for x:

log e 5 = 6 − x

Since log e = ln(x), we can replace it:

ln 5 = 6 − x

Subtract six from both sides and move the negative sign so x is isolated.

x =− (ln 5 − 6)

Now you can put this into your calculator and get the answer:

x = 4.39

Example 2: Suppose you had the problem: ln x + ln (x − 3) = 1

The first thing you would do is combine the two parts of the equation since ln(x) is technically a
logarithm and you can use the product property of logs.

log e (x * (x − 3) = 1

You can rewrite this as: e1 = x2 − 3x ​so you can solve for x.

Now you can either evaluate​ e1 in your calculator, or remember it equals ≈ 2.718 .

Then you subtract 2.718 over to the right side and use the quadratic equation to solve for x.

0 = x2 − 3x − 2.718

You should get x = 3.73 .

 Earlier this year, we learned about exponential functions, logarithms, and inverse
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equations. Since e ​is an exponential equation, its inverse equation will be a logarithm with the
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same base: the function ln(x) is a logarithm with base e. If you look at the graph of e you can
see its an exponential graph and when you look at the graph of ln(x) you can see it's the inverse
function since input (x) and output (y) variables have switched. For example, look at the only
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ordered pair with both numbers being integers on both graphs. On the graph of e , the ordered
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pair is (0,1) and on the graph of ln(x), it’s (1,0). Exponential functions that use e or ln(x) are
perfect examples of inverse functions especially when the problem requires you to solve it since
you will have to use one of these functions in order to undo the other function and isolate the
variable you have to solve.

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In the real world, exponential functions that use e are found in compound interest
formulas. Compound interest is addition of interest to an initial sum, usually a loan or deposit.
It’s basically interest on interest or a reinvestment of interest, so that the next payment of
interest is added to the principal sum plus any previously accumulated interest. In the United
States, there are many banks that use compound interest and it will be very helpful to know how
it works and the equation it uses so that when it’s time to pay the money to the bank, you will
know what to expect and there will be no surprises.