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7.3 The Natural Base e. The Natural Base e. A famous constant (similar to π) is the natural base, e (also known as Euler’s number). e ≈ 2.718281828459 e is irrational (non-repeating, not-terminating). A function in the form f(x) = Ce bx is a natural base exponential function.

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the natural base e

The Natural Base e

A famous constant (similar to π) is the natural base, e (also known as Euler’s number).

e ≈ 2.718281828459

e is irrational (non-repeating, not-terminating).

A function in the form f(x) = Cebx is a natural base exponential function.

if b>0…growth

if b<0…decay

Let’s take a look at the graph of a natural base exponential function…

ex graph f x e x1

–2 -1.5 -1 -0.5 0 0.5 1 1.5 2

.14 .22 .37 .61 1 1.65 2.72 4.48 7.39

Ex. Graph f(x) = ex

x

f(x)

slide6

Recall that we have studied the formula for the value of an investment in which interest is compounded n times per year:

A = P(1 + r/n)nt

Here is another common investment formula:

A = Pert

A is the balance P is the initial principal r is the interest rate t is the number of years

In this formula, the interest is compounded continuously (about every second)

Example: For a deposit of $5000 into an account that pays 8.5% interest, find the balance after 5 years if the interest is compounded continuously.

A = Pert

= 5000 • e.085 • 5

= $7647.95

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