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Application Questions On Exponentials and Logarithms
Application Questions On Exponentials and Logarithms
𝑜 α𝑇
1. The length of a bar, 𝑥, at a temperature of 𝑇 𝐶 is given by the equation 𝑥 = 𝑥0𝑒 where
Compound Interest
The amount of money A after 𝑡 years when a principal P is invested at an annual interest
𝑟 𝑛𝑡
rate 𝑟 compounded 𝑛 times per year is given by 𝐴 = 𝑃(1 + 𝑛
) .
If the years is divided into 𝑛 equal intervals, as 𝑛 tends to infinity the capital for one year
𝑟
is 𝐴 = 𝑃(𝑒 )
𝑟𝑡
For 𝑡 years, 𝐴 = 𝑃(𝑒 )
𝐴 −𝑟𝑡
And the present value of P is 𝑃 = 𝑟𝑡 → 𝑃 = 𝐴𝑒
𝑒
Questions:
1. What is the amount of money that results from investing $800.00 at 4%
compounded quarterly after a period of 2 years?
2. Suppose that $5000.00 is invested in an account where interest is compounded
continuously at a constant annual equivalent rate of 6%. How much money is in
the account after
i) 5 years ii) 7.5 years
3. The value M of a bank account in which $80 is invested at 4% interest
𝑡
compounded annually, is given by 𝑀 = 80(1. 04) .
a)Find the value of the account when 𝑡 = 6
b) Find 𝑡 in terms of M