The document discusses exponential functions and their properties. It defines exponential functions as functions of the form f(x) = bx where b > 0 and b ≠ 1. It provides examples of calculating exponential expressions using rules for positive integer, fractional, and real number exponents. Exponential functions are important in fields like finance, science, and computing. Common exponential functions include y = 10x, y = ex, and y = 2x. An example shows how to calculate compound interest monthly over several periods using the exponential function formulation.
* Evaluate exponential functions.
* Find the equation of an exponential function.
* Use compound interest formulas.
* Evaluate exponential functions with base e.
logarithmic, exponential, trigonometric functions and their graphs.pptYohannesAndualem1
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* Introduce functions and function notation
* Develop skills in constructing and interpreting the graphs of functions
* Learn to apply this knowledge in a variety of situations
Economics
Curve Fitting
macroeconomics
Curve fitting helps in capturing the trend in the data by assigning a single function
across the entire range.
If the functional relationship between the two quantities being graphed is known to be
within additive or multiplicative constants, it is common practice to transform the data in
such a way that the resulting line is a straight line.(by plotting) A process of quantitatively
estimating the trend of the outcomes, also known as regression or curve fitting, therefore
becomes necessary.
For a series of data, curve fitting is used to find the best fit curve. The produced equation is
used to find points anywhere along the curve. It also uses interpolation (exact fit to the data)
and smoothing.
Some people also refer it as regression analysis instead of curve fitting. The curve fitting
process fits equations of approximating curves to the raw field data. Nevertheless, for a
given set of data, the fitting curves of a given type are generally NOT unique.
Smoothing of the curve eliminates components like seasonal, cyclical and random
variations. Thus, a curve with a minimal deviation from all data points is desired. This
best-fitting curve can be obtained by the method of least squares.
What is curve fitting Curve fitting?
Curve fitting is the process of constructing a curve, or mathematical functions, which possess closest
proximity to the series of data. By the curve fitting we can mathematically construct the functional
relationship between the observed fact and parameter values, etc. It is highly effective in mathematical
modelling some natural processes.
What is a fitting model?
A fit model (sometimes fitting model) is a person who is used by a fashion designer or
clothing manufacturer to check the fit, drape and visual appearance of a design on a
'real' human being, effectively acting as a live mannequin.
What is a model fit statistics?
The goodness of fit of a statistical model describes how well it fits a set of
observations. Measures of goodness of fit typically summarize the discrepancy
between observed values and the values expected under the model in question.
What is a commercial model?
Commercial modeling is a more generalized type of modeling. There are high
fashion models, and then there are commercial models. ... They can model for
television, commercials, websites, magazines, newspapers, billboards and any other
type of advertisement. Most people who tell you they are models are “commercial”
models.
What is the exponential growth curve?
Growth of a system in which the amount being added to the system is proportional to the
amount already present: the bigger the system is, the greater the increase. ( See geometric
progression.) Note : In everyday speech, exponential growth means runaway expansion, such
as in population growth.
Why is population exponential?
Exponential population growth: When resources are unlimited, populations
exhibit exponential growth, resulting in a J-shaped curve.
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
3. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
The Exponential Functions
K
N
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
4. b0 = 1 b–K =
b = ( b ) b =
K
N
The Exponential Functions
K
N
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
5. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 =
8 =
The Exponential Functions
K
N
3
2
3
2
8 –2 =
8 =
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
6. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 =
The Exponential Functions
K
N
3
2
3
2
8 –2 =
8 =
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
7. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 =
82
1
64
1
The Exponential Functions
K
N
3
2
3
2
8 –2 = =
8 =
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
8. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
64
1
The Exponential Functions
K
N
3
2
3
2
8 –2 = =
8 =
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
9. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
8 –2 = =
8 = ( ) = 1/4
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
10. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
8 –2 = =
8 = ( ) = 1/4
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
11. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
b. 101.22 =
8 –2 = =
8 = ( ) = 1/4
Example B.
a. 91.50 =
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
12. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
b. 101.22 =
8 –2 = =
8 = ( ) = 1/4
Example B.
a. 91.50 = 9 =
3
2
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
13. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
b. 101.22 =
8 –2 = =
8 = ( ) = 1/4
Example B.
a. 91.50 = 9 = (9 ) = 27
3
2
3
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
14. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
b. 101.22 = 10
61
50
8 –2 = =
8 = ( ) = 1/4
Example B.
a. 91.50 = 9 = (9 ) = 27
3
2
3
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
15. b0 = 1 b–K =
b = ( b ) b = ( )
K
N
K N
bK
1
K
N
b
1
Example A.
80 = 1
8 = ( 8 ) = 4
3 2
82
1
3
2
8
1
64
1
The Exponential Functions
K
N
3
2
3
2
Decimal exponents are well defined since decimals may be
represented as reduced fractions.
b. 101.22 = 10 = ( 10 ) 16.59586….
61
50
50 61
8 –2 = =
8 = ( ) = 1/4
Example B.
a. 91.50 = 9 = (9 ) = 27
3
2
3
The meaning positive integral exponents such as x2 is clear.
Below are the rules for other special exponents:
16. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159..
10
Example C.
The Exponential Functions
17. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10
Example C.
The Exponential Functions
18. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10
Example C.
31
10
The Exponential Functions
≈1258.9..
19. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10
Example C.
31
10
314
100
The Exponential Functions
≈1258.9.. ≈1380.3..
20. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
21. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10 10≈1385.45..
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
22. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10 10≈1385.45..
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
Hence exponential functions or functions of the form
f(x) = bx (b > 0 and b 1) are defined for all real numbers x.
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
23. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10 10≈1385.45..
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
Hence exponential functions or functions of the form
f(x) = bx (b > 0 and b 1) are defined for all real numbers x.
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
Exponential functions show up in finance, bio science,
computer science and physical sciences.
24. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10 10≈1385.45..
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
Hence exponential functions or functions of the form
f(x) = bx (b > 0 and b 1) are defined for all real numbers x.
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
Exponential functions show up in finance, bio science,
computer science and physical sciences.
The most used exponential functions are
y = 10x, y = ex and y = 2x.
25. For a real-number-exponent such as , we approximate the
real number with fractions then use the fractional powers to
approximate the result.
3.14159.. 3.1 3.14 3.141 3.1415
10 10 10 10 10 10≈1385.45..
Example C.
31
10
314
100
3141
1000
31415
10000
The Exponential Functions
Hence exponential functions or functions of the form
f(x) = bx (b > 0 and b 1) are defined for all real numbers x.
≈1258.9.. ≈1380.3.. ≈1383.5.. ≈1385.1..
Exponential functions show up in finance, bio science,
computer science and physical sciences.
The most used exponential functions are
y = 10x, y = ex and y = 2x.
Let’s use $ growth as applications below.
26. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
Compound Interest
27. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
28. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
29. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01)
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
30. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
31. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
32. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
After 2 periods A = P(1 + i)(1 + i) = P(1 + i)2
33. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
After 3 months: 1020(1 + 0.01) = 1000(1 + 0.01)2(1 + 0.01)
= 1000(1 + 0.01)3 = $1030.30
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
After 2 periods A = P(1 + i)(1 + i) = P(1 + i)2
34. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
After 3 months: 1020(1 + 0.01) = 1000(1 + 0.01)2(1 + 0.01)
= 1000(1 + 0.01)3 = $1030.30
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
After 2 periods A = P(1 + i)(1 + i) = P(1 + i)2
After 3 periods A = P(1 + i)2(1 + i) = P(1 + i)3
35. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
After 3 months: 1020(1 + 0.01) = 1000(1 + 0.01)2(1 + 0.01)
= 1000(1 + 0.01)3 = $1030.30
After 4 months: 1030(1 + 0.01) = 1000(1 + 0.01)3(1 + 0.01)
= 1000(1 + 0.01)4 = $1040.60
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
After 2 periods A = P(1 + i)(1 + i) = P(1 + i)2
After 3 periods A = P(1 + i)2(1 + i) = P(1 + i)3
36. Example D. We deposit $1,000 in an account that gives
1% interest compounded monthly. How much money is there
after 1 month? 2 months? 3 months? and after 4 months?
After 1 month: 1000(1 + 0.01) = $1010.
After 2 months: 1010(1 + 0.01) = 1000(1 + 0.01)(1 + 0.01)
= 1000(1 + 0.01)2 = $1020.10
After 3 months: 1020(1 + 0.01) = 1000(1 + 0.01)2(1 + 0.01)
= 1000(1 + 0.01)3 = $1030.30
After 4 months: 1030(1 + 0.01) = 1000(1 + 0.01)3(1 + 0.01)
= 1000(1 + 0.01)4 = $1040.60
Compound Interest
Let P = principal, i = (periodic) interest rate, A = accumulation.
After 1 period A = P(1 + i)
After 2 periods A = P(1 + i)(1 + i) = P(1 + i)2
After 3 periods A = P(1 + i)2(1 + i) = P(1 + i)3
Continue the pattern, after N periods, we obtain the
exponential periodic-compound formula (PINA): P(1 + i)N = A.
37. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
The PINA Formula (Periodic Interest)
38. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
39. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
0 1 2 3 Nth period
N–1
40. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
41. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i)
42. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2
43. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3
44. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1
45. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
46. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
Example E. $1,000 is in an account that has a monthly interest
rate of 1%. How much will be there after 60 years?
47. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
Example E. $1,000 is in an account that has a monthly interest
rate of 1%. How much will be there after 60 years?
We have P = $1,000, i = 1% = 0.01,
48. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
Example E. $1,000 is in an account that has a monthly interest
rate of 1%. How much will be there after 60 years?
We have P = $1,000, i = 1% = 0.01, N = 60 *12 = 720 months
49. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
Example E. $1,000 is in an account that has a monthly interest
rate of 1%. How much will be there after 60 years?
We have P = $1,000, i = 1% = 0.01, N = 60 *12 = 720 months
so by PINA, there will be 1000(1 + 0.01) 720
50. Compound Interest
Let P = principal
i = (periodic) interest rate,
N = number of periods
A = accumulation
then P(1 + i) N = A
The PINA Formula (Periodic Interest)
We use the following time line to see what is happening.
P
0 1 2 3 Nth period
N–1
Rule: Multiply (1 + i) each period forward
P(1 + i) P(1 + i) 2 P(1 + i) 3 P(1 + i) N - 1 P(1 + i) N
Example E. $1,000 is in an account that has a monthly interest
rate of 1%. How much will be there after 60 years?
We have P = $1,000, i = 1% = 0.01, N = 60 *12 = 720 months
so by PINA, there will be 1000(1 + 0.01) 720 = $1,292,376.71
after 60 years.
51. Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
52. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year.
Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
53. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year.
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
54. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year.
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12.
Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
55. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year. After 40 years the
total return is $250,000, what was the initial principal?
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12.
Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
56. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year. After 40 years the
total return is $250,000, what was the initial principal?
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12. After 40 years, i.e.
N = 40(12) = 480 months the return A = 250,000
Compound Interest
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
57. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year. After 40 years the
total return is $250,000, what was the initial principal?
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12. After 40 years, i.e.
N = 40(12) = 480 months the return A = 250,000, so by PINA:
Compound Interest
P (1 + ) 480 = 250,000
0.09
12
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
58. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year. After 40 years the
total return is $250,000, what was the initial principal?
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12. After 40 years, i.e.
N = 40(12) = 480 months the return A = 250,000, so by PINA:
Compound Interest
P (1 + ) 480 = 250,000
0.09
12 or
(1 + ) 480
P = 250,000
0.09
12
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
59. Example F. We open an account with annual rate r = 9%,
compounded monthly, i.e. 12 times a year. After 40 years the
total return is $250,000, what was the initial principal?
We have r = 9% = 0.09 for one year,
and f = 12 is the number of times of compounding in one year,
so the periodic or monthly rate i = 0.09/12. After 40 years, i.e.
N = 40(12) = 480 months the return A = 250,000, so by PINA:
Compound Interest
P (1 + ) 480 = 250,000
0.09
12 or
(1 + ) 480
P = 250,000
0.09
12
P = $6,923.31
by calculator
Hence the initial deposit is $6,923.31.
In practice, compound interests are usually quoted in
annual interest rate r and the frequency f, the number of times
of compounding in one year, so the periodic rate i = .
r
f
60. x -4 -3 -2 -1 0 1 2 3 4
y=2x 1/16 1/8 1/4 1/2 1 2 4 8 16
Graphs of the Exponential Functions
Here is a table of y = 2x for plotting its graph.
62. (0,1)
(1,2)
(2,4)
(3,8)
(-1,1/2)
(-2,1/4)
y=2x
Graph of y = 2x
x -4 -3 -2 -1 0 1 2 3 4
y=2x 1/16 1/8 1/4 1/2 1 2 4 8 16
Graphs of the Exponential Functions
Graph of y = bx where b>1
Here is a table of y = 2x for plotting its graph.
This is the shape of the graphs of y = bx for b > 1.
63. x -4 -3 -2 -1 0 1 2 3 4
y=(½)x 16 8 4 2 1 1/2 1/4 1/8 1/16
Here is a table of y = (½)x for plotting its graph.
Graphs of the Exponential Functions
65. (0,1)
(-1,2)
(-2,4)
(-3,8)
(1,1/2) (2,1/4)
y= (½)x
Graph of y = bx where 0<b<1
Graph of y = (½)x
x -4 -3 -2 -1 0 1 2 3 4
y=(½)x 16 8 4 2 1 1/2 1/4 1/8 1/16
Here is a table of y = (½)x for plotting its graph.
Graphs of the Exponential Functions
This is the shape of the graphs of y = bx for b < 1.
66. The graphs shown here are the different returns with r = 20%
with different compounding frequencies.
Compounded return on $1,000 with annual interest rate r = 20% (Wikipedia)
Compound Interest
67. The graphs shown here are the different returns with r = 20%
with different compounding frequencies. We observe that
I. the more frequently we compound, the bigger the return
Compounded return on $1,000 with annual interest rate r = 20% (Wikipedia)
Compound Interest
68. The graphs shown here are the different returns with r = 20%
with different compounding frequencies. We observe that
I. the more frequently we compound, the bigger the return
II. but the returns do not go above the blue-line
the continuous compound return, which is the next topic.
Compounded return on $1,000 with annual interest rate r = 20% (Wikipedia)
Compound Interest
69. Compound Interest
B. Given the monthly compounded periodic rate i, find the
principal needed to obtain a return of $1,000 after the given
amount the time.
1. i = 1%, time = 60 months.
Exercise A. Given the monthly compounded periodic rate i and
the amount the time, find the return with a principal of $1,000.
2. i = 1%, time = 60 years.
3. i = ½ %, time = 60 years 4. i = ½ %, time = 60 months.
5. i = 1¼ %, time = 6 months. 6. i = 1¼ %, time = 5½ years.
.
7. i = 3/8%, time = 52 months. 8. i = 2/3%, time = 27 months.
1. i = 1%, time = 60 months. 2. i = 1%, time = 60 years.
3. i = ½ %, time = 60 years 4. i = ½ %, time = 60 months.
5. i = 1¼ %, time = 60 months. 6. i = 1¼ %, time = 60 years.
7. i = 3/8%, time = 60 years 8. i = 2/3%, time = 60 months.
70. Compound Interest
D. Given the annual rate r, convert it into the monthly
compounded periodic rate i and find the principal needed to
obtain $1,000 after the given amount the time.
1. r = 1%, time = 60 months.
C. Given the annual rate r, convert it into the monthly
compounded periodic rate i and find the return with a principal
of $1,000 after the given amount the time.
2. r = 1%, time = 60 years.
3. r = 3 %, time = 60 years 4. r = 3½ %, time = 60 months.
1. r = 1%, time = 60 months. 2. r = 1%, time = 60 years.
3. r = 3 %, time = 60 years 4. r = 3½ %, time = 60 months.
5. r = 1¼ %, time = 6 months. 6. r = 1¼ %, time = 5½ years.
.
7. r = 3/8%, time = 52 months. 8. r = 2/3%, time = 27 months.
5. r = 1¼ %, time = 6 months. 6. r = 1¼ %, time = 5½ years.
.
7. r = 3/8%, time = 52 months. 8. r = 2/3%, time = 27 months.
71. Exercise B.
1. 𝐴 ≈ 1816.7
(Answers to the odd problems) Exercise A.
3. 𝐴 ≈ 36271.41 5. 𝐴 ≈ 1077.39
7. 𝐴 ≈ 1214.87
1. P ≈ 550.45 3. P ≈ 27.57 5. P ≈ 474.57
7. P ≈ 67.55
1. 𝐴 ≈ 1051.25
Exercise C.
3. 𝐴 ≈ 6036.07 5. 𝐴 ≈ 1006.27
7. 𝐴 ≈ 1016.39
Exercise D.
1. 𝑃 ≈ 951.25 3. 𝑃 ≈ 165.67 5. 𝑃 ≈ 993.78
7. 𝑃 ≈ 983.88
Compound Interest