Precalculus AB Honors

8.5 Applications of Logs and Exponential Functions

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Compound Interest: You deposit an initial amount and gain interest. Over time, you gain
interest on the interest, which is modeled by exponential growth.
 r
kt A = final amount
=A P 1 +  P = initial amount
 k r = annual interest rate
k = number of compounds per year
t = number of years

EX#1 Boston deposits $500 in an account that pays 2% annual interest compounded quarterly.
How much money will he have after 10 years?

EX#2 Suppose Gretchen invests $2000 at a rate of 3.2% annual interest compounded monthly.
How long will it take for the investment to double?

Compounding Continuously: If the interest is compounded continuously, the amount of money

you have after t years is A= P ⋅ e rt .

EX#3 Suppose Caitlin wants to end up with $5000 after 6 years. How much money should she
invest at 4% annual interest compounded continuously to reach her goal?

EX#4 What interest rate do you need to have $1000 grow to $1100 over a period of 2 years if
the bank compounds continuously?
Application - Newton’s Law of Cooling
The temperature of an object can be determined at time t by using the formula
T (t ) = Tm + (T0 − Tm )e − kt

EX#5 You’re going to start a coffee shop, called “Cool Beans,” to compete with Starbucks.
You want to serve the coffee only after its temperature is 95°F, with the idea that you can
better taste the complex flavors in coffee at a cooler temperature. After brewing it, the
temperature of the coffee is 212°F. You let it sit in a room with a temperature of 75°F.
After 5 minutes, the temperature is down to 150°F. How long will the coffee have to sit
before you can serve it to your customer?

6. Solve the equation for y: log ( x 2 ) − log(8) + 3log( x) − x =log(y) .

7. Determine a formula for each exponential function below.

(3, 54)

(1, 6)
f (0) = 9, f (1) = 6.2