The natural base is e = 2.71828…
The function f(x) = ex is the natural exponential function.
Domain: all the reals
Range: y>0
y-intercept: (0,1)
Compound Interest Formulas:
After t years, the balance A in an account with principal P and annual interest rate r (expressed as a decimal) is given by the following formulas:
1. For n compoundings per year: A = P((1 + r/n)nt) .
Example: You want to invest $500 for 3 years in a bank. They offer you the following choices, which do you take?
1. 3% interest compounded 4 times a year
2. 4% interest compounded 2 times a year
3. 5% interest compounded 1 time a year
2. For continuous compounding: A = Pert.
Example: You have a credit card with $2000 on it. Your interest is 15.4%. How much interest will you have paid on it by the end of the year?… by the end of 2 years?
Homework #26 pg. 225; #35, 39, 43, 47, 51, 53, 59 - 69 odd, 73, 76
