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Slide 8 Def
• Work out Warmups
• Find a radioactive decay problem
• Carbon Dating and Depreciation Worksheet.
Logarithms and Exponentials
Depreciation of Value
Objectives:
1.) Review the concept of exponentials and
logarithms as applicable to compound interest and
continuously compounded interest.
2.) Apply the concept of exponentials and logarithms
to depletion of value problems and carbon dating
problems
Recall the three Interest Equations
( )
t
r I P + = 1
nt
n
r
I P

.

\

+ = 1
Compound Interest
Basic Interest
rt
Ie P =
Continuously
Compounded Interest
Just a fact
• At Iowa State Bank in Sac City, the rates on
CD’s and savings accounts: “the best rates we
have are 1.25% on savings and 2.5 on a CD I
do believe!! Loans range from 4.259% mostly
but we have some that can go 18% on our not
so good customers.”
 Lucas Burrington last year
Let us look at Continuously
Compounded Interest Rates in Nature
• Population Growth and Carbon Dating
• Recall, we studied the idea of taking an
investment amount and continuously
compounding a rate set at 100%.
– P= I(1 + )
nt
n
1
· ÷ n as
We came up with
P = Ie
rt
I= Initial Investment Amount
P= Final Amount/payout
r = annual interest rate
t= time in years
Model #1
Population Growth
(not just human population, bacteria,
animals…)
• P= ae
kt
P is the population
a= a fixed amount
k= rate of growth
t= time
Example # 38 Pg 244
Key info: t= 0 represents the year 2000
t= 20 for the year 1980 then
Population is 172,000, so 172 in thousands
So… 172= 224e
k(20
) 20 (
224
172
÷
=
k
e
) 20 (
224
172
ln ÷ =

.

\

k
) 20 ( 264151575 . ÷ = ÷ k
k = 0132 .
t
e P
0132 .
224 =
people P In 608 , 255 , 2010 =
Model: (Equation that will give
you population
Carbon Dating/ Radioactive Decay
• Radioactive Decay: Radioactive decay involves the
spontaneous transformation of one element into
another
• Half Life: The time required for half the nuclei in a
sample of a specific isotopic species to undergo
radioactive decay.
Carbon Dating/ Radioactive Decay
• Page 239 “Study Tip”
Radioactive Decay equation:
y = ae
bt
• y is the amount element you have left
• a= initial amount
• e is e
• b is the rate of deterioration
• t is the time the element has deteriorated for.
Looking at Radium226
For example: Radium226 is a radioactive element.
Its half life is 1620 years.
Suppose you have 10 grams of it.
) 1620 (
2
1
10 10
r
e
÷
= ·
1.) Use the half life to find the rate in which it deteriorates. Find “r”
2.) Then find any y amount with respect to time.
R= .000428
How much radioactive radium226 will
remain after …
a.) 500 years? 8.07 grams
b.) 3240 years? 4.001 grams
a.) 500 year? 8.07 grams
b.) 3240 years? 4.001 grams
Page 244 #25
Homework: page 244 #711; 1718;
2529; 3741
Vocabulary Depreciation
• Defined as the permanent decrease in the
quality, quantity or the value of an asset over
time
• Computers, cars, production machinery,…
Suppose you bought a computer
• Computers generally depreciate in value
about 20% each year.
• The Macbook Pro with the 17” screen and all
the bells and whistles is sold for $2,300 at the
Mac store ( ridiculously unfortunate). If you
bought this Mac, how much is its resale value
in 1 year? 2 years? 3 year?
$2,300
1 year 2 years
3 years
$2,300
1 year 2 years 3 years
Initial Value
The question:
The value in … ?
20 % Depreciation Rate Per Year
Initial Value: $ 2,300
Question: The value in 1 year, 2 years, 3 years…, t years?
20% Depreciation rate per year
In 1 year:
In 2 years:
In 3 years:
Depreciation Equation
P = I(1 – r)
t
P =Depreciated Value
I = Original amount
r= depreciation rate
t= time in years
Cars generally lose 15% to 20% of their
value a year.
• A BMW Z4 2000 had a retail price of
$46,500.00. Every year, the car depreciates in
value 15%. If you were to buy it this year,
2011, approximately how much would you
expect to buy it for?
• John Bros. acquired a large production print
machine on 1st Jan 2009 at a cost of $14,000.
The firm writes off the depreciation at 20%
every year.