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Math 140. 4.1 – Exponential Functions; Continuous Compounding. Some things just don’t grow linearly, they grow exponentially (ex: population, compound interest ). Some things just don’t grow linearly, they grow exponentially (ex: population, compound interest ). U.S. Population.
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Math 140 4.1 – Exponential Functions; Continuous Compounding
Some things just don’t grow linearly, they grow exponentially (ex: population, compound interest).
Some things just don’t grow linearly, they grow exponentially (ex: population, compound interest). U.S. Population Source: http://en.wikipedia.org/wiki/File:US_Population,_1790_-_2011.svg
To model such behavior, we use the exponential function, . is the base (, ). ex: ex:
Natural Exponential Base: (Amount of money you’d have in an account if you invested $1 at 100% interest rate per year for one year, where interest is compounded continuously.)
In general, the continuously compounded interest formula is , and the regular compound interest formula is .
Ex 1. Evaluate: Ex 2. Solve: Ex 3. Solve:
Ex 4. Find values of the constants and so that the curve contains and .
Ex 4. Find values of the constants and so that the curve contains and .