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5. Exponential functions are useful in business and economics. Lesson 7 discusses them. Show
how the values are entered into your functions and also calculate the amounts for each of the
following:
Solution
A1: Monthly inflation rate = 0.2%. Thus annualized rate = (1+0.2/100)^12 – 1
= 2.43%
A2: Here 1.05 = (1+r)^12
Or (1.05)^1/12 = 1+r
Or r = 0.407%
B1: F = 10,000*e^(0.06*10)
= 10,000*1.8221
= $18,221.18
B2: Here F = 141.02, r = 5.5% or 0.055 and t = 6.25
Thus P = 141.02/e^(0.055*6.25)
Or P = 141.02/1.4102
= $100
Now F = 20,000. R = 4.75% or 0.0475 and t = 7.5
Thus P = 20,000/e^(0.0475*7.5)
= $14,005.95

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5. Exponential functions are useful in business and economics. Lesson.pdf

  • 1. 5. Exponential functions are useful in business and economics. Lesson 7 discusses them. Show how the values are entered into your functions and also calculate the amounts for each of the following: Solution A1: Monthly inflation rate = 0.2%. Thus annualized rate = (1+0.2/100)^12 – 1 = 2.43% A2: Here 1.05 = (1+r)^12 Or (1.05)^1/12 = 1+r Or r = 0.407% B1: F = 10,000*e^(0.06*10) = 10,000*1.8221 = $18,221.18 B2: Here F = 141.02, r = 5.5% or 0.055 and t = 6.25 Thus P = 141.02/e^(0.055*6.25) Or P = 141.02/1.4102 = $100 Now F = 20,000. R = 4.75% or 0.0475 and t = 7.5 Thus P = 20,000/e^(0.0475*7.5) = $14,005.95