Understanding The Intuition Behind e

(On Going)

Mina Basilious
June 2023

Contents
1 Introduction 2
1.0 Pre-Intro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 What is e? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2 The Defintion of e 3

3 Expressing ex from The Definition 4

4 Derivative of ex 5

5 The exp(x) function 6

6 Intro To The Complex Numbers 8

1
1 Introduction
1.0 Pre-Intro
I really wanted to make a YouTube video about this topic, but I
decided to just write it down for you guys. This document, “Building
Intuition About e”, will help you relate more than one topic that
seemed unrelated at first glance. You’ll see how e pops up randomly
in different things, even complex numbers, which can be used to
express rotation. This document will be especially helpful if you’re
in a math-related major, as you’ll see how e is used in a lot of
different areas of math.

1.1 What is e?
Have you ever wondered how much money you would have in a bank if you
started with just one dollar and the interest rate was an incredible 100 percent
per year? At first glance, it may seem like a simple calculation: one dollar plus
100 percent interest would give you two dollars. But what if we break down
the calculation into smaller periods, like months or days? Something interesting
starts to happen.

As we divide the time into smaller and smaller intervals, the amount of
money you accumulate becomes larger and larger. For example, if we calculate
the interest quarterly instead of annually, you would end up with more than
two dollars. If we further break it down to monthly or daily compounding, the
amount continues to increase.

However, what’s fascinating is that this growth does not continue infinitely.
It eventually reaches a point where the increase in the amount becomes smaller
and smaller with each smaller time interval. And remarkably, it converges to a
specific number known as e (approximately 2.71828).

We can define the mathematical constant e as the limit of the following

expression as n approaches infinity:
 n
1
e = lim 1 +
n→∞ n

This expression can be used to calculate the amount of money you will have
after you have compounded interest over an infinite number of periods. In other
words, if you compound interest over an infinite number of periods, your money
will grow at a rate of e. And as we call it “The Definition of e”.

2
2 The Defintion of e
You might be wondering why we express interest with that funky-looking ex-
pression.

When discussing interest, we often use the following expression:

I(1 + p)t
Here, “I” represents the initial amount of investment, “p” represents the interest
rate (typically a percentage) by which the money grows, and “t” represents the
number of interest periods. To understand this concept better, let’s break it
down:
I (1 + p)(1 + p)(1 + p)...(1 + p)
| {z }
t times
This can be thought of as multiplying the initial amount “I” by (1 + p) for “t”
times. Simplifying further, we get:
I + pI (1 + p)(1 + p)...(1 + p)
| {z }
t−1 times

The term I + pI represents the second-time interest or the additional money

earned from the interest itself. We can refer to this as the second revenue,
denoted as I2 = I + pI. The pattern continues, and we can express it as:
I2 (1 + p)(1 + p)...(1 + p)
| {z }
t−1 times

This pattern repeats for subsequent periods.

Now, let’s revisit the example mentioned in the introduction by breaking it

down:
1(1 + 1)1
If we divide the year into two six-month periods and adjust the interest accord-
ingly, it would look like this:
1
(1 + )2
2
To express this concept using an infinitely large number, we introduce a limit:
 n
1
e = lim 1 +
n→∞ n
Through this analysis, we have arrived at the conclusion that the expression
can be represented by the value of “e” obtained through just the aforemen-
tioned limit.

We could even express it differently if we say that m = n1 , and n → ∞ then

m → 0. That will make the expression with m look like that.
1
e = lim (1 + m) m
m→0

3
3 Expressing ex from The Definition
From the definition of e.
 w
1
e = lim 1+
w→∞ w
w could even be a function of n, let it be f (n), as f (n) = nx In the case f (n) → ∞
as x > 0 we could just write with n → ∞ that we used to.
 n
1 x
e = lim 1 + n
n→∞
x

By raising to power x :  x n
ex = lim 1+
n→∞ n
How about x values that are less than zero? In that case, n → −∞ implies the
idea that their function will approach infinity.
  nx
1
e = lim 1+ n
n→−∞
x

let us define a variable m = −n. Then

 x − m
x
e = lim 1 −
m→∞ m
By raising to power −x :
 x m
e−x = lim 1−
m→∞ m
From that, by generalizing, we concluded:
 x n
ex = lim 1 +
n→∞ n

4
4 Derivative of ex
Firstly we will find the derivative of ex from the formula for the First principle
of Derivatives:
f (x + h) − f (x)
f ′ (x) = lim
h→0 h
x
In our case f (x) is just e

d x ex+h − ex
e = lim
dx h→0 h
from the property of exponents we just make the manipulation to make look
better.
d x ex eh − ex
e = lim
dx h→0 h
d x ex (eh − 1)
e = lim
dx h→0 h
x
Because e is not related to the limit we could just get out.

d x eh − 1
e = ex lim
dx h→0 h
For that, we just need to calculate what limit converges to

eh − 1
lim
h→0 h
From the other definition of e, we could write this expression like that
1
((1 + n) n )h − 1
lim lim
h→0 n→0 h
h
(1 + n) n − 1
lim lim
h→0 n→0 h
In this case, n and h are approaching the same value which makes them the
same. And just n = h.
For that, we could just write the whole expression with h like that.
h
(1 + h) h − 1
lim
h→0 h
(1 + h)1 − 1
lim
h→0 h
1+h−1
lim
h→0 h
h
lim = 1
h→0 h

5
For that ex have a very special property which makes its derivative is itself.
d x
e = ex
dx

d cx
But what is the dx e , I will leave it to the reader to work it out.

5 The exp(x) function

The exp(x) is just a function that is defined like that:

x2 x3 x4 xn
exp(x) = 1 + x + + + + ... + + ...
2! 3! 4! n!
I guess in your mind that something like this would go crazy when we compute
bigger and bigger numbers, but surprisingly when we plug in any x in it, it will
converge to some number.

Figure 1: Approximating the function with plugging 2 in it

for first 10 terms by Python

As we see indeed the function when we plug with some number it converged
to some irrational number I guess.

However, why do we care about this function in the first place it just looks
random and you wonder what it does with e in the first place and why I men-
tioned it.

I know you have a lot of questions but stand with me alittle bit.

This function has a very special property that we could relate to.
its derivative is just itself.

And we could check that.

6
 d x2 x3 x4 xn x2 x3 nxn−1
(1 + x + + + + ... + + ...) = 0 + 1 + x + + + ... + + ...
dx 2! 3! 4! n! 2! 3! n!
x2 x3 x4 xn−1
=1+x+ + + + ... + + ...
2! 3! 4! (n − 1)!
The fact that is going to infinity how much derivatives we will do to it it will
be the same.
Do you know something that has the same property?
You are right. It is ex

And if we could prove they have the exact initial position in some number
we could just say they are the same.

Imagine you have a blue and red car and they have the same velocity and
start from the same exact point. They just follow the same path and their
position at any time will be the same. For that, if we could prove that start at
some point with the exact value we could just say. they are the same.

If we substitute zero in the exp function.

exp(0) = 1 + 0 + 0 + 0 + 0 + ...

And if we made the exact thing in ex .

e0 = 1

That means
ex = exp(x)
now we could express e like that
1 1 1 1 1 1
e= + + + + + ... + + ...
0! 1! 2! 3! 4! n!

7
6 Intro To The Complex Numbers
Im
z = x + iy = r(cos θ + i sin θ)
y
r
θ
Re
x

In most cases, z is just referring to a complex number that is defined by two

parts the real part and the imaginary part. But we could even express it with
polar style by knowing its angle with real axis and the distance from the origin.

|z| as we call it modulus of z. it also means the distance from the origin.
And from the upper figure the modulus of z, we could express it by
p
|z| = x2 + y 2 = r

Then there is arg(z) or as we call it the argument of z. The argument means

the angle that the vector that defines the complex numbers make of the real
axis. And we could also express it by
y
arg(z) = arctan( ) = θ
x