5
Exponential and Logarithmic
Functions
Copyright © Cengage Learning. All rights reserved.
5.1 Exponential Functions
Copyright © Cengage Learning. All rights reserved.
Objectives
► Exponential Functions
► Graphs of Exponential Functions
► Compound Interest
3
Exponential Functions
Here, we study a new class of functions called exponential
functions. For example,
f (x) = 2x
is an exponential function (with base 2).
Notice how quickly the values of this function increase:
f (3) = 23 = 8
f (10) = 210 = 1024
f (30) = 230 = 1,073,741,824 4
Exponential Functions
It can be proved that the Laws of Exponents are still true
when the exponents are real numbers.
5
Exponential Functions
Here are some examples of exponential functions:
f (x) = 2x g (x) = 3x h (x) = 10x
6
Graphs of Exponential Functions
7
Example 2 – Graphing Exponential Functions by Plotting Points
Draw the graph of each function.
(a) f (x) = 3x
(b) g(x) =
8
Example 2 – Solution
We calculate values of f (x) and g(x) and plot points to
sketch the graphs in Figure 1.
9
Graphs of Exponential Functions
A family of exponential
functions
Figure 2
10
Graphs of Exponential Functions
All of these graphs pass through the point (0, 1) because
a0 = 1 for a 0.
You can see from Figure 2 that there are two kinds of
exponential functions:
If 0 < a < 1, the exponential function decreases rapidly.
If a > 1, the function increases rapidly.
11
Graphs of Exponential Functions
12
Example 3 – Identifying Graphs of Exponential Functions
Find the exponential function f (x) = ax whose graph is
given.
(a) (b)
13
Example 5 – Comparing Exponential and Power Functions
Compare the rates of growth of the exponential function
f (x) = 2x and the power function g (x) = x2 by drawing the
graphs of both functions in the following viewing rectangles.
(a) [0, 3] by [0, 8]
(b) [0, 6] by [0, 25]
(c) [0, 20] by [0, 1000]
14
Compound Interest
15
Compound Interest
Exponential functions occur in calculating compound
interest. If an amount of money P, called the principal, is
invested at an interest rate i per time period, then after one
time period the interest is Pi, and the amount A of money is
A = P + Pi = P(1 + i)
If the interest is reinvested, then the new principal is
P(1 + i), and the amount after another time period is
A = P(1 + i)(1 + i) = P(1 + i)2.
16
Compound Interest
Similarly, after a third time period the amount is
A = P(1 + i)3
In general, after k periods the amount is
A = P(1 + i)k
Notice that this is an exponential function with base 1 + i.
If the annual interest rate is r and if interest is compounded
n times per year, then in each time period the interest rate
is i = r /n, and there are nt time periods in t years. 17
Compound Interest
18
Example 6 – Calculating Compound Interest
A sum of $1000 is invested at an interest rate of 12% per
year. Find the amounts in the account after 3 years if
interest is compounded annually, semiannually, quarterly,
monthly, and daily.
Solution:
We use the compound
interest formula with
P = $1000, r = 0.12,
and t = 3.
19
Compound Interest
If an investment earns compound interest, then the annual
percentage yield (APY) is the simple interest rate that
yields the same amount at the end of one year.
20
Example 7 – Calculating the Annual Percentage Yield
Find the annual percentage yield for an investment that
earns interest at a rate of 6% per year, compounded daily.
Solution:
After one year, a principal P will grow to the amount
A=P
= P(1.06183)
21
Example 7 – Solution cont’d
The formula for simple interest is
A = P(1 + r)
Comparing, we see that 1 + r = 1.06183, so r = 0.06183.
Thus, the annual percentage yield is 6.183%.
22
