Section 4.

1
Exponential Functions
An exponential function f(x) is defined by
f ( x )=bx where b>0∧b ≠ 1

and the exponent x is any real number.

Rules for Exponentials
x
1. b b y =b x+ y
bx x− y
2. b y
=b

x y xy
3. ( b ) =b
x x x
4. ( bc ) =b c

Examples of exponential functions

x
1. f ( x )=3
2. f ( x )=2 −x

x
1 1
¿ ( )()
2 x
=
2
1 x
3. f ( x )=
4 ()
Important :The base of an exponential
function can NEVER be negative .

Equations involving exponential functions

 2x
1
1. Solve ( 5 ) =125

so 5−2 x =53

−2 x=3

−3
x=
2

2.
2

f ( x )=5 x +2 x , Find x for which f ( x )=125

5 x +2 x =125

5 x +2 x =53
x 2+ 2 x=3
x 2+ 2 x−3=0
( x−1 ) ( x+3 )=0
x=1 ,−3

Graphs of exponential functions

x
Graph f ( x )=2
X 2x

-2 ¼
-1 ½
 0 1
1 2
2 4

If base is greater than 1 then the graph rises as above

an the y intercept is 1.

Graphs of exponential functions where 0¿ b<1

Graph the function

f ( x )=¿
X 1 x
y=( )
2
-2 4
-1 2
0 1
1 ½
2 ¼

Properties of Exponential Functions.

1. The domain of any exponential function is (−∞, ∞).
The range of any exponential function is (0 , ∞).
 x
2. The graph of y=f ( x )=b has y intercept (0,1). There is
no x intercept meaning the graph of an exponential
function will not cut the x-axis.
3. If b>1, the graph rises from left to right.
If b<1, the graph falls from left to right.
4. If b>1, the graph approaches the x-axis as x
becomes more and more negative.
If 0<b<1, the graph approaches the x-axis as x
becomes more and more positive.

Transformations of exponential functions

Use the graph of y=2x ¿ plot y=2 x −3

Shift the graph downward by 3 units.

Applications of Exponential Functions

Compound Interest

The compound amount S of $ P invested for t

years at the rate r compounded annually is
t
S=P ( 1+r )
Actual compound interest = S-P

1. Suppose $2000 is invested at 13% compounded

annually.
a) Find the value of the investment after 5 years.
S=P ( 1+r )n =2000 (1+0.13 )5=$ 3684.87
b) Find the compound interest.
Compound Interest = S-P = 3684.87−2000=$ 1684.87

Compound Interest when interest is

compounded k times a year.

r tk
S=P 1+( )
k
S=Compound amount ;
P=Principal amount ;
r =annual interest rate ;
t=time∈ years;
k =No. of ×interest is
compounded ∈a year .

Qs. 25
Find the compound amount and the compound
interest if $5000 is invested for 2.5 years at 9%
compounded monthly.

Here P = $5000; t = 2.5; r = 0.09; k = 12

So compound amount is
tk 2.5 ( 12 )
r 0.09
S=P 1+( ) k (
=5000 1+
12 ) =$ 6256.36

Compound interest = S – P = 6256.36-5000=

$1256.36

Definition:
The number e:
e=¿

Natural Exponential Function

f ( x )=e x where e ≅ 2.71828 …
is called the natural exponential function
¿ an exponential function with base e .

If interest is compounded continuously,

 S=P e rt

Present value of an investment:

P=S e−rt
if interest is compounded continuously

r −kt
( )
P=S 1+
k
if interest is compounded k ×a year .

Ex: Find the present value of $5000 due 4 years

from now if interest is 7% compounded
quarterly.
P = ? , S = 5000, k = 4, t = 4
−16
0.07
P=5000 1+( 4 ) =$ 3788.08

Effective Interest Rate:

This is the simple annual interest rate. If interest
is compounded at the nominal rate r , the
effective interest rate is the simple annual
interest rate r that yields the same amount of
interest after 1 year.

If interest is compounded continuously,

r e =er −1
If interest is compounded k times a year and r is
the annual interest rate then
r
r e =( 1+i )k −1 where i=
k

Ex: Which investment is better, an investment

that earns 10% compounded quarterly or 9.95%
compounded monthly.

First effective interest rate

r k
( )
r e = 1+ −1
k
4
0.1
¿ ( 1+
4 )
−1

¿ 0.10381 or 10.381%

Second effective interest rate

r k
( )
r e = 1+ −1
k
0.0995 12
(
¿ 1+
12
−1)
¿ 0.10417∨10.417 %

So the second investment is better.

x
1 1
Graph the function f ( x )=e andx −x
()
g ( x )=e = x =
e e
 x
For f ( x )=e , base is e and e> 1. SO the graph rises
from left to right.

1 x 1
For ()
g ( x )=e− x =
e
, thebase is which is between zero∧one .
e

Hence the graph falls from left to right.

 Ex: The population of a city is given by
P=100000 e 0.05 t .
where t is the number of years after 1990.

Predict the population for the year 2020.

Sol: The no. of years from 1990 to 2020 is t = 30.
So
P=100000 e 0.05 t =100000 e0.05 (30 )=271828.

1 x
Qs . Which of these is the graph of2 x , 4 x ∧ ()
3
.
Lahore School of Economics
Spring Term 2020
 Mathematics II
Name: Section:
Instructor : Afshin Omer
Assignment 1 for Sec 4.1 : Exponential Functions

1. Graph the following functions on the same set of axes:

x
1
i) f ( x )=4 x ()
ii) g ( x )=
4

State the domain and range of f(x) and g(x).

2. Evaluate the given expressions

i) 2 ( 3 )4

( x+ y )0
ii) 1

( x2 y3 )6

4
iii) 2 3 3
(e e )

3. Find
 i) the compound amount and
ii) the compound interest if
$2000 is invested for 5 years at 3% compounded monthly.

4.

Find the compound amount if $500 is invested for 5 years at 11%

compounded

i)annually

ii)semiannually.

iii)Continuously

5.Solve the equations

i) 4 2 x−1=16

x−1
1
()
2

ii) =23−2 x
8
6.A manufacturer estimates that when x units of a commodity are produced the
market price p dollars per unit is given by the demand function p=300 e−0.02 x

i) What market price corresponds to the production of 100 units?

ii) How much revenue is obtained when 100 units of a commodity are
produced?

7.Which investment is better, an investment that earns 8 % compounded

quarterly or 7.9 % compounded monthly.

8. Find the present value of $25000 over a term of 10 years at an annual interest
rate of 5% if interest is compounded

a) Semiannually

b) Monthly