Mathematics for Business Informatics 1

Department of Mathematics
Winter Semester

Calculus Math 105

Lecture 4
Exponential, Logarithmic Functions & its Applications

By
Prof. Dr. Fathy Helail
1
 Contents
1. Exponential Functions.
2. Logarithmic Functions.
3. Inverse Properties of Exponential & Logarithmic
Functions.

4. Business Applications on Exponential functions:

4.1. Compounded Interest.
4.2. Present Value.

5. Solved Examples & Problems.

2
1. Exponential Function
Definition 1. If a > 0 , a  1 & the Exponent x is any
real number. Then: the Exponential Function with
base a is given by: f ( x)  a . x

N.B. In the above definition a  1 because if a = 1; it yields

that f ( x)  1x  1. This function is known as a constant function.

1.1. Rules (Properties) of Exponents x & y:

Let x, y are real numbers & a, b be positive numbers,
then we have (7 pr0perties):
1. a  1 .
0
e.g. (1.5) 0
 1.
x y
2. a a  a
x y x y
. e.g. 3 .3 3
x y
.
3
 Rules of Exponents (continue):
x 2
a x y 5 2 3 1 1
3. y  a . e.g. 3
5 5  .
a 5 5

4. (a x ) y  a x . y . e.g (32 )3  32(3)  36  729.

5. ( ab) x  a x . b x .
x
a x a
6. ( )  x .
b b
x 1
7. a  x .
a
Remark:
Given Properties holds for any real values for exponent x
& positive values of base a :
e.g. 20.6  0.660, (1.56) 2  1.876.
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1.2. Graph of Exponential Function:
Consider the function f ( x)  3 , we construct the following table:
x

f ( x)  3 x
Using above table, we can sketch the graph
of the exponential function: f ( x)  3 x .
Here a = 3; which is >1.

Important Remark:  
We have 2 cases for a (base):
1.If a > 1, the graph rises from Left to Right (as
shown).
2.If 0 < a < 1, the graph falls from Left to Right.
Generally, any exponential functions of the form:
f ( x)  a x , where aa>1 0, a &1.a > 1.
Then, f (x) have the following properties:
f ( x)  a x .
1. The domain of f (x) is R
or (  ,  ).
2. The Range of f (x) is all + ve R
or (0,  ) .

3. The y-intercept of f (x) is (0 , 1)

& there is no x-intercept.

4. as x approaches  , f (x) approaches  .

5. as x approaches   , f (x) approaches 0.

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 1.3. Natural Exponential Function: e ͯ
In calculus, the most convenient (or natural) choice for a Base in
exponential function is the irrational number e whose decimal
approximation is e = 2.71828182846... approximately.

Definition 2. (Limit definition of e )

1 n
The number e is defined to be: lim(1  )
n  n
Or equivalently: lim(1  x)1/ x  e
x 0
x
The graph of f (x) = e
is shown in the figure:
x
N.B: e has many Business
applications & will be shown in
the next sections.
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 2. Logarithmic Functions
2.1. Introduction: From previous studying of algebra courses,
you may be somewhat familiar with specially this common
logarithm ; log10 x, (here the Base a is =10):

Definition 3. The Logarithmic Function: log a x is

defined to be: log a x  y if & only if a x,
y

where a is called the Base of the exponential function.

Remark . In Calculus the most useful base for logarithm is e

(natural logarithm).

Example: For the common logarithm of base a =10, we have:

log10 x is defined as follows :
log10 x  b if and only if 10b  x
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 2.2. The Natural Logarithmic Functions ln x
Definition 4. The Natural Logarithmic Function ln x is
y
defined as follows: ln x = y if & only if e = x,
where ln x is log e x . i.e. the base is e.

i.e. natural logarithmic & natural exponential functions are

inverse functions: i.e. every logarithmic equation can be
written in an equivalent exponential form & every exponential
equation can be written in an equivalent logarithmic form.
Here we give some examples:
Example 1: Logarithmic form & Exponential form:
ln 1 = 0 & e 0
1

ln e = 1 & e e
1
1 1 1
ln  1 &
& e  .
e e
9 ln 2  0.693 &
& e0.693  2.
Graph of Natural Logarithmic Function ln x is as follows:
From the shown graph, we deduce some properties of
ln x as follows:
y = ln x
Domain : (0, ).
Domain:
Range : (, ).
Range:
Interceptx xaxis:
Intercept axis( :1,(1, 00).
).
ln x   as x  .
ln x   as x  0.

Important Remark:
y = ln x is not defined for x = 0 or x is negative numbers.
2.3. Properties of Natural Logarithms:
We have the following 3 properties for Natural Logarithms:
1. ln (x y) = ln x + ln y.
x
2. ln ( ) = ln x - ln y .
y
n
3. ln x = n ln x .
Remarks: 1. Rewriting a logarithm of a single quantity as sum,
difference, or multiple of logarithm is called: Expanding the
logarithmic expression.
2. The reverse procedure is called: Condensing a log expression.
2.4. Inverse properties between Exponential & Logarithmic:
We have the following 2 properties:
x 3
1. ln e = x; e.g. ln e = 3.
ln x ln 5
2. e = x; e.g. e = 5.
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 Example 2. Use the properties of Logarithms to rewrite the
following expression as a logarithm of single quantity(Condensing)
2 ln( x  2)  3 ln x.
Solution: We have: 2 ln( x  2)  3ln x  ln ( x  2) 2  ln x 3
( x  2) 2
 ln 3
.
x
Example 3. Solve the following Logarithmic equation: ln x = 2.
Solution: We have ln x = 2, by taking Exponentiation for each
ln x 2 2
side: we get: e = e then e
x= .

0 .1 x
Example 4. Solve the Exponential equation: e =4.
0 .1 x
Solution: We have e = 4, by taking ln for both sides:
0 .1 x
ln e = ln 4 which gives 0.1 x = ln 4, then x = 10 ln 4.
4. Business applications on exponential functions
4.1. Finding the balance A using Compounded Interest:
Let P the amount deposited; if the interest compounding takes
place n times every year at annual interest rate r, after takes
t year, then the balance A will be: r
1. Compounded n times per year: A  P (1  ) nt
;
n
2. Compounded Continuously: A  Pe rt .
4.2. Finding Present Value
To find the present value of a future investment, we use the
r nt
formula for compounded interest as shown: A  P (1  )
n
By solving the form for P ; we get the present value P Formula:
A .
P 
r nt
(1  )
n
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Example 5. Steven deposits $12,000 in an account for 25 years.
Compare the balance for each situation:
(a) The interest rate is 7% compounded quarterly.
(b) The interest rate is 7% compounded continuously.
Solution.
(a) We have: n = 4, r = 7%=0.07, t = 25, P = 12,000.
Then, the balance A is given by:
4(25)
 0.07 
A  12, 000 1    $68, 017.87
 4 
(b) The balance A is given by:

A  12, 000 e 4(25)

0.07(25)
 $69, 055.23
Clearly; The balance in the case of compounding continuously
is greater than the balance in case of compounding quarterly.
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 Example 6. An investor is purchasing a 12- year certificate
of deposit that pays an annual interest percentage rate of 8%,
compounded monthly. How much should the person invest in
order to obtain balance of $15,000 at maturity ?

Solution.
A = 15,000, r = 0.08, n = 12, t =12 ; then
the present value P (to be invested) will be:
15000
P   $5761.72.
0.08 12 .12
(1  )
12

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5. Solved Examples & Problems
Example 7.
Some solved problems on the properties of exponential functions:

( a ) (23 )(25 )  23 5  28  128.

4 1 2 4 2
(b) (2 )(2 )  2
2
2  .
4
(c ) (32 ) 4  32( 4)  38  6561.
1 3 1 1 3
(d ) ( )   ( )  4 3
 64.
4 (1 ) 3 1
4 4
33 3 2
( e) 2
 3  3.
3
1 1 1 1
( f ) (2 2
)(3 2
)  [(2)(3)] 2
6 2
 6.
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Example 8
Graph the following exponential functions with base 2:
y = 2 & y = 2 x .
x

Solution.
The 1st graph:
y = 2 x gives us base a = 2 >1
which Rises from left to right.

2 x

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Example 9. Expanding Logarithmic Expression
Use the properties of logarithms to rewrite each expression
as a sum, difference, or multiples of logarithms:

Solution.
10
(a) ln  ln 10  ln 9.
9
1 1
(b) ln x  1  ln ( x  1)  ln ( x 2  1).
2 2 2
2
(c) ln [ x ( x  1)]  ln x  ln ( x  1)  2 ln x  ln( x  1).
2 2

Example 10. Condensing Logarithmic Expressions

Use the properties of Logarithms to rewrite the following
expression as logarithm of a single quantity: ln x + 2 ln y.
Solution. ln x  2 ln y  ln x  ln y 2
 ln x y 2
.
 Example 11. You deposited P dollars in an account
whose annual rate is r, compounded continuously.
How long will it take for your balance to double P ?
Solution. After t years the balance A  Pe rt
. So to double P, we
get Pe  2 P . By canceling P from both sides, we get: e  .2
rt rt

1
taking ln for both sides ln e  ln 2  rt  ln 2  t  ln 2.
rt

r
1
i.e. the time t inversely proportional to the interest rate r: t  ln 2.
r

e.g. If we have the annual rate is r = 3%, then the time will be
t =23.1 years.
& if we have r = 12%, then the time will be t = 5.8 years.
Verify?
 Problems 1.
1. Use the properties of logarithms to rewrite each
expression as a sum, difference, or multiples of logarithms:
x
(a ) ln( 2
) Answer  ln x  2 ln z  ln w
z w
x 5 ( x  2)8 1
(b) ln 3 Answer  [5ln x  8ln( x  2)  ln( x  3)]
x7 3

. )Use the properties ( x  2) 2

2( a 2 ln( x 2)  3ln xof Logarithms to rewrite: the
Answer  ln
following expression as a logarithm of a single quantity:x 3
21
(b) ln 3  ln 7  ln 2  2 ln 4 Answer :  ln
32

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 4. Simplify each expression:
5 ln ( x  7)
(a) ln e (b) e

5. Solve the following Logarithmic equation:

ln ( x + 1 ) = 7 .
Answer x = e7  1

6. Solve the following Exponential equation:

0.1 x
0.1 e  0.5
Answer x = 10 ln 5
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‘/+