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Page 343. 9/5/2014 2:22 AM. 5.3 - Exponential Functions. 1. Applications of Exponential Functions. Section 5.3. Compound Interest Equation. A = Total Amount Earned P = Principal r = Interest Rate t = Time + = Growth – = Decay. Example 1.

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Page 343

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  1. Page 343 9/5/2014 2:22 AM 5.3 - Exponential Functions 1

  2. 5.3 - Exponential Functions

  3. Applications of Exponential Functions Section 5.3

  4. Compound Interest Equation • A = Total Amount Earned • P = Principal • r = Interest Rate • t = Time • + = Growth • – = Decay 5.3 - Exponential Functions

  5. Example 1 You invest $5000 in an account that pays 6.25% interest per year. How much money will your investment be in 5 years? • A = ? Do you know much you are going to make? • P = $5,000 $5,000 is deposited • r = 6.25% Interest Rate – remember it needs to be in decimal form • t = 5 Time it takes to accrue amount 5.3 - Exponential Functions

  6. Example 1 You invest $5000 in an account that pays 6.25% interest per year. How much money will your investment be in 5 years? 5.3 - Exponential Functions

  7. Example 2 You buy a car that cost $5,000 and depreciates 6.25% per year. How much money will you end up paying in 5 years? 5.3 - Exponential Functions

  8. Your Turn The value of a $3000 computer decreases about 30% each year. Write a function for the computer’s value in 4 years. Does the function represent growth or decay? 5.3 - Exponential Functions

  9. Compound Interest Equation • A = Total Amount Earned • P = Principal • r = Interest Rate • n = Compounded Amount • t = Time 5.3 - Exponential Functions

  10. Example 3 $5,000 is deposited in an account that pays 6% annual interest compounded quarterly. Find the balance after 25 years if the interest is compounded quarterly. • A = ? Do we know how much it is when the balance after 25 years? • P = $5,000 $5,000 is deposited • r = 6% Interest Rate – remember it needs to be in decimal form • n = 4 Compounded quarterly • t = 25 Time it takes to accrue amount 5.3 - Exponential Functions

  11. Example 3 $5,000 is deposited in an account that pays 6% annual interest compounded quarterly. Find the balance after 25 years if the interest is compounded quarterly. 5.3 - Exponential Functions

  12. Example 4 Determine the amount that a $5,000 investment over ten years at an annual interest rate of 4.8% is worth compounded daily. 5.3 - Exponential Functions

  13. Your Turn How much must you deposit in an account that pays 6.5% interest, compounded quarterly, to have a balance of $5,000 in 15 years? 5.3 - Exponential Functions

  14. Assignment Page 353 1-8 all, 13-19 odd, 23, 27 9/5/2014 2:22 AM 5.3 - Exponential Functions 14

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