THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

Computer Science and Mathematics Department

Business Mathematics
MTU 07101

Equations, Functions and Graphs in

Business
 Content /Coverage
1. Define equation, function and an inequality
2. Solve
a. Linear equation in one variable, systems of linear
equations
b. Quadratic equations
c. Inequalities in one variable, systems of linear
inequalities
d. Linear programming using graphical method
3. Interpret the functions and their graphs of
a. Linear functions
b. Quadratic functions
c. Polynomial functions
d. Exponential functions and
e. Composite functions
 Equations
• Is the statement that show quantities or things are
equal.
• Examples
x 8  4
1.
2. x
2
4 x  3 x 7
3. x  3x  4x - 1  0
3 2

• Common equations are

a. linear equations
b. Quadratic equations,
c. polynomial equation etc.
 Linear Equations
• Linear equations are the equations with the
variables of one degree.
• The form of linear equation isy  ax  b
where a and b are real numbers and “a” is
slope
• Examples:
x 4 6

1. y  3 x 7
2. ax  b  y
3.
Linearity of Linear Equations
An equation is linear, only if
1. All variables have exponent of one (1)
2. No products of variables
3. No quotients of variable
Exercise 1.1
• Which of the following are linear
equations in x and y variables
a. x  3 y  7
b. y  xy  5
x  7 y  2
c.
1
d. kx  2 x  k  0
2

e. 2 x  7 y  x  1
k

f. 2 x  y  7  0 .
x
 Answers for exercise 1.1
• Consider the rules for linearity of linear equations
a. x  3 y  7 is a linear equation
b. y  xy  5 not linear because of the term
xXY  7 y  2
c. kx  1 x  k  0 is linear equation x 2
2

2
d. 2 x  7 y  x  1
k not linear because of
e. 2 x  y  7  0 is a linear equation
f. x is not ylinear because of the
term x
 Solving Linear Equation
• The value of variable in the linear equation is
given by making the subject the other term in
equation.

• Example 1: Solve the following

2
x  6
equations
1 3
x 3 x  4 x
a). x+ 4 = 0 b). 5 c).2 4

• Solution 2
x  6
5
a). x = -4 b). x  15
Example 2 : word problem
• There are three parcels, X, Y and Z. their total
mass is 168 kg. X has mass 20 kg less than Z’s
and Y has twice the total mass of X and Z Find
the mass of each parcel.
Solution: let X = x kg
then Z = x + 20kg
y = 2(x+x+20) = 4x+40kg
hence x+x+20+4x+40 = 168
x = 18
The masses of X, Y, Z are 18 kg, 38 and
112kg
 Systems of Linear Equations
(Linear Simultaneous equations)
• The system of linear equations is a combination
of at least two linear equations.

• Examples of linear equations in two variables x

and y are
c1x + c2y =d; where c1, c2, d €R
c3x +c4 y = b; where c3, c4, b € R

• Normally a solution of the system of equations is

the point of intersection of the graphs of two or
more equations.
Theorem
Given the system of “m” equations and “n” variables,
there will be one of the following possibilities for
solutions to the system
1.There will be exactly one solution
2.There will be no solution or
3.There will be infinitely many solutions
Clarifications
Given the system of “m” equations and “n” variables. There
will be
1. Exactly one solution if the equations lintersect at one
1

point m = n l 2

2. No solution if the equations do not intersect

l 1 (parallel)
l 2

m n
3. Infinitely many solutions if the l 1 and l 2
 Method of Solving Simultaneous
Equations
We can solve the systems of linear equations in
different ways/methods
1. Elimination method
2. Substitution method
3. Graphical method
4. Matrix method
5. Use instruments / tools (calculator, etc)
 Elimination method
• Elimination method involves remove of variables
in the system of equations one after another.

• Use the elimination method find the value of x

and y
x  y 4
2x  3 y  11
Solution xy 4 .......... .......... .........( i)

2 x 3 y  11 .......... .......... ........(i i)

• Eliminate the value of x, 2 (i) and 1 (ii) then subtract (i) -

(ii) to obtain value of “y”

2 x  2 y  8

2 x  3 y  11
y  3
• Eliminate the value of y, 3(i) and (ii) then subtract (i)-(ii)
to obtain value of “x”
3 x  3 y  12

2 x  3 y  11
x 1
• The value of (x, y) = (1, -3)
 Substitution method
• Substitution method involves making the subject
one of unknown in one of the equation and
substitute in the other equation.
• Example: Solve by substitution method
x  y  3

5x  5y  1
Solution
xy 3 .......... ... .......... ......(i)

5 x 5 y 1 .......... .......... ......... (ii)

• From the equation (i)

x 3 y (iii)

• Substitute(iii) in equation (ii)

5(3 - y)  5y  1
y  1.4 (iv)
• Equation (iv) into (iii)

x  1 .6
Graphical Method
• The solution to the system of equations is the
point of intersection of the graphs of two or more
equations.

• Example: Solvexbygraphical
y  3 method
2x  y  4

• Table values (or use intercepts)

y =3-x y = 4-2x
Graph of System of Equation
y-axis
8
6
42 x  y  4
2 x y 3
-2 -1 1 2 3 x-
axis
-2
-4
Example: word problem
• The cost of six pairs of trousers and four shirts is
37,200Tshs. Samwel bought four pairs of
trousers and three shirts for 25, 500Tshs. Find
the cost of each item
• Solution: Let the cost of pair of trousers be
xTshs.
the cost of a shirt be yTshs.
Then 6x+4y=37,200
4x +3y = 25,500
trousers cost 4800Tshs each and
shirts cost 2,100Tshs each
 Quadratic Equation
• A quadratic equation is an equation with the
highest degree of two.
• The form of the quadratic equation is
ax
2
 bx  c  0
where a, b, c are € anda  0
• Example
1. x
2
4x4  0
2. x
2
4 0
Method of Solving Quadratic Equation
Methods of solve quadratic equations;
1. Factorization method
2. Completing Square
3. General Quadratic method
4 Graphical method.
In solving QE arrange the equation to the form of

ax
2
 bx  c  0
Factorization method
• Involves collecting common value / number in
the quadratic expression.
• Examples: Solve by factorization method
1. 4 x  2 x  0
2

2. x 2  6 x  9  0
3. x  9  0
2

4.  7 x  15  0
2
2 x
solution
 2x  0 3.x  9  0
2
1.
2
4x
2 x ( 2 x  1)  0 ( x  3 )( x  3 ) 0
2x 0 or 2 x 1  0
x  3 or x 3
1
x 0 or x  
2

2. x
2
6x 9  0 4.2 x  7 x  15  0
2

(x  3 )( x  3 )  0 (2 x  3 )( x  5 )  0
x  3  0 or x 3  0 2 x  3  0 or x 5  0

x  3 or x  3 x 
3
or x 5
2
 Completing square
• Completing square is the method useful to establish
the relationship between the coefficients of the
different terms of a perfect square
• Example: Solve by completing the
square 5x
2
6x2  0
• Solution:5 x  6 x  2  0
2

5x
2
6x  2 add 2 both sides
6 2 divide by 5 both sides
x
2
 x 
5 5
2 2 adding a half
coefficient x 2  6 x   3   2   3 
5 5  5  5  of x both sides
 2
 3 19 form of perfect
x   

square 5 25

 3 19
x  
 5 25

3 19
x  
5 5
3  19
x 
5
General Formula
For any quadratic equationax  bx  c  0
2

ax  bx   c subtract by c both sides

2

x 
2 b
x  
c divide by a both sides
a a
2 2

x
2 b  b  c  b 
 x      add half of x coefficient
a 2a  a 2a 
both sides
2 2
 b  c  b 
x        Form of perfect square
 2a  a 2a 

 b b
2
 4 ac Quadratic general formula
x 
2a
Note, if
i). b  4 ac  0
2
equation has two distinct
rootsb 2  4 ac  0 b
2a
ii). b 2  4 ac  0 solution is ,two identical
root
iii). there are no real roots
7x
2
 2 x  32  0

Example: solve for x,b  b  4 ac 2

x 
Solution: a = 7, b = 2,c = -32
2a

use 2  2
2
 4  7  32
x 
2 7

 16
x 2 x 
7
 Inequality
Inequality tells us about the relative size of two
values
Symbol Words Example

> greater than x+3>2

< less than 7x < 28

greater than or equal
≥ 5≥x-1
to
≤ less than or equal to 2y + 1 ≤ 7
Inequalities have properties that are similar to those
of equations, but the properties differ in some
Transformations that Produce Equivalent
Inequalities
1. Add the same number to both sides.
2. Subtract the same number from both sides.
3. Multiply both sides by the same positive number.
4. Divide both sides by the same positive number.
5. Multiply both sides by the same negative
number and reverse the inequality.
6. Divide both sides by the same negative number
and reverse the inequality.
Example
Solve 2x+ 1 ≤ 6x- 1
Solution
2x+ 1 ≤ 6x-1 write original inequality.
-4x + 1 ≤ -1 Subtract 6x from each side
-4x ≤ - 2 Subtract 1 from each side.
x≥ 1 Divide each side by -4 and
reverse 2
the inequality
The solutions
1 are all real numbers greater than or
equal to 2
Example 2
The weight w (kg) of an Icelandic saithe is given by
w = 10.4t-2.2 where t is the age of the fish in years.
Describe the ages of a group of Icelandic saithe
that weigh up to 29 pounds.

Solution
w ≤ 29 Weights are at most 29 pounds.
10.4t -2.2 ≤ 29 substitute for w
10.4t ≤ 31.2 Add 2.2 to each side
t ≤ 3 Divide each side by 10.4
The ages are less than or equal to 3 years
Solving Compound Inequalities
• A compound inequalities is two simple
inequalities joined by “and” or “or.”

Solving an “and” Compound Inequality

Example: Solve -2 ≤ 3t-8 ≤ 10.

Solution
To solve, you must isolate the variable between the
two inequality signs.
-2 ≤ 3t- 8 ≤ 10 Write original inequality.
6 ≤ 3t≤ 18 Add 8 to each expression.
2 ≤ t≤ 6 Divide each expression by 3.
 Solving an “Or” Compound Inequality
Example: Solve 2x+ 3 < 5 or 4x-7 > 9

Solution
Solve each part separately
2x+ 3 < 5
2x< 2 Subtract 3 from each side
x< 1 Divide each side by 2
or
4x-7 > 9
4x > 16 Add 7 to each side
x> 4 Divide each side by 4
System of inequalities
• The solution to the system of inequalities is the
region of intersection of the graphs of two or
more equations.

• Example: Solve by xgraphical

 y  3 method
2x  y  4

• Solution: Table of value (intercept)

y = 3-x y = 4-2x
The Graph of System of the inequalities
y
8

4
2x  y 4
-2 -1 0 1 2 3
X
x  y 3
-4
The clear part is the required region
Linear Programming Problem (LPM)
Introduction
• Linear programming is a mathematical technique
used to allocate scarce resources in organization.
• It is applied in area like food preparation, furniture
manufacturing, loan allocation in banks, products
manufacturing in factories, etc.
• Scarce resources are limited materials that have
to be optimized. e.g money, labour, time, timber,
raw materials etc
 Formulation of Linear Programming
Problem/ model (LPM)
Procedure in formulation of LPM
1.Determine the objective of formulating of a linear
programming problem (e. g minimization of cost
or maximization of profit)
2.Determine the variables in the problem (e. g
tables, chairs, coast, gown, etc. )
3.Determine the constraints to the problem
4.Write the objective function and constraints using
variables.
 Example
Mwembe chai furniture produces tables and chairs
which must be processed through assembly and
finishing departments. The assembly department
has 60 hours available per week, finishing
department can handle up to 48 hours of a week.
Manufacturing one table requires 4 hours in
assembly and 2 hours in finishing departments.
Each chair requires 2 hours to assemble and 4 hours
to finish. If profit is Tshs.6500/= per table and Tshs.
4,500 per chair:
Formulating this as a linear programming problem
for Mwembe Chai Furniture if their objective is to
produce and sell in order to realize maximum profit.
Solution
The above information can be
summarized
Department asDecision variable Resource
Tables Chairs available
Assembly 4 2 60
Finishing 2 4 48
Profits (Tshs) 6,500 4,500
i. Decision variable
Let x be the number of table to produce
y be the number of chairs to produce
ii) Objective function
Max . Z  6,500 x  4,500 y

iii). Constraints
4 x  2 y  60

2x  4 y  48
x  0, y 0

iv) Linear programing problem (model)

Max . Z  6,500 x  4,500 y

Subject to
2x  4 y  48
x  0, y  0
Solving a Linear Programming by Graph
Steps
1. Plot the constraints on a Cartesian plane
2. Identify the feasible region (region satisfies all
the constraints) on the plotted graph.
3. Find the coordinates of the extreme points of the
feasible region
4. Determine the value of the objective function for
each of the extreme point of the feasible region
5. Determine the optimal solution for the problem
 i). For maximization problem, the optimal solution
will be that corner point which provides the
highest
value of the objective function

ii) For minimization problem will be obtained at a

corner point that provides the lowest value of the
objective function.

• Intercepts
4x  2 y  60
, (x=0, y=30) and (x=15, y=0)
2x  4 y  48
, (x=0, y=12) and (x=24, y=0)
x  0, y 0
Graph of Linear Programming
y

40

30
4x  2 y  60
20

10 D
C
2x  4 y  48
A
B x
10 20 30 40
Optimal solution

12 tables and 6 chairs should be manufactured to

optimize the profit of 105,000/=
 Functions
• A function is the set of ordered pairs of (x, y) in
which no distinct ordered pairs have the same first
number.
where x is independed variable represent
domains
y is depended variable carries values of
range.
or
• A function is the correspondence between two sets
• Example 1: Set of children and Fathers
A B
Moses Moses

Asha

John
Ali

children Father
• Example 2: Set of numbers
5
2
4 9
6 13
8 17
x 2x+1
Function notation
Example 1: The function f maps x onto 3x+1
Denoted asf : x  3 x 1
or f(x)  3 x  1
3x  4x - 1
2
Example 2: The function g maps x onto
Denoted asg : x  3x  4x - 1
2

or g(x)  3x  4x - 1
2

y = f(x) means y is a function of x and y depends

on x
y = g(x) means y is a function of x and y depends
Pictorial representation of Functions
• Pictorial is the presentation of functions in Venn
/ oval or picture.
• Consider f(x)  3 x  1
f(x)

-1 • -2
0 • 1
1 •4
2 •7

x 3x+1
 •Example of functions
i). f(x)  x 3  3 x 2  4 x- 1

ii).

iii). y 3
 x

f(x)  x
iv). 4

v). g(x) = x+32

•All above are functions since each “x” corresponds
with only one (unique) y and one y in the range
correspond with at least one x.
•Question:
•State whether the equations are functions or not.
i). y
2
 x 4
ii). y
2
x 9
2

iii). y
2
x 9 2

iv). x
y 
y

•All are not functions since one value of “x” has two
different values of “y”.
Value of function f(x)
• The value of function f (x) is given by
substituting “x” value (independent variable) in
the function.
x 2
9
• Example:gA( x )function
 g(x) is defined by
x 3
, Find g(0), g(-3), g(3)
0 9
2

Solution. g (0)  3
0 3
g(0),
( 3 ) 9
2

g ( 3 ) 
g(-3), 3 3
Domain and range
• Consider the function defined by mapping of set
A into B , that is . The set A is called the domain
and B is the range.
• Example: For the function y = f(x)
Domain is x :y  f(x) 

Range is y :y  f(x) 
• Example: Find the domain and range of
f(x)  2 x  5
Domain = { all real number of x}
Range is = { all real number of y}
 Graph of functions
General rules for sketching graphs
• The curves for linear and quadratic graphs can be
easily sketched using intercepts and table values. For
more difficult functions it is better to calculate
certain features of the graphs. These are
1. Find the intercepts (x and y intercept)
2. Find the symmetrical lines
i) Is the curve symmetrical about the x- axis?
(Does the equation contain even powers of x
only?)
 ii) Is the curve symmetrical about the y- axis?
(Does the equation contain even powers of y
only?)
iii) Is the curve symmetrical about origin?
(That is does the equation stay the same when x
is
replaced by (-x) and y replaced by (-y)?)
3. What happen to y if x is made large? or what
happen to
x if y is made large?
4. Existence of asymptotes
i). Are there any value of y which makes x infinity?
ii). Are there any value of x which makes y infinity?
5. Find the maximum or minimum value of y
Sometimes it is helpful to determine the maximum
Common function
• There are some common functions e.g.
1. Polynomial Functions
(Constant functions, linear functions, Quadratic
functions…)
2. Rational Functions,
3. Step Functions,
4. Periodic Functions
5. Absolute Value Function
6. Exponential Functions
7. Logarithmic Functions
8. Trigonometric Functions etc.
Linear Functions
• Linear function is the function of the form of
f(x)  ax  b
where a and b € , “a” is slope
• Example of linear functions
1. f(x)  2 x  6
2. f(x)  4 x  7
3. f(x)  0 . 5 x  8
4. f(x)  2 x  5
4
The graph ofy  ax  b
• The graph of linear function is a straight
y  ax  b y   ax  b
line Y Y

x x

a>0 a<0
• Domain = { all real number of x}
• Range is = { all real number of y}
Quadratic Functions
A quadratic function is an equation of the form
f(x)  ax  bx  c
2

where a, b, c are € anda  0

Examples:
i. f(x)  3 x 2  6 x  3
ii. g(x)  4 x 2  6 x  3
iii. h(x)  4 x 2
iv. f(x)  x 2  1
The graph of f(x)  ax  bx  c 2

• The graph of Quadratic function is a curve called

parabola
Y Y

x
x

Open upward when a>0 open down ward when

a<0

f(x)  ax  bx  c
2
f(x)   ax  bx  c
2
 Symmetry of the Parabola
• The Symmetry of the parabola is the vertical line
passing through the vertex.
• The standard form of a quadratic equation is
written as
f(x)  a(x  h)  k
2

• wherea  0 and h is an axis of symmetry passing

through the vertex (h, k)
 Line of symmetry
(h, k) vertex

y  x  2x  3
Example: Find the vertex of the parabola 2

Solution y  x 2  2 x  3 y  ( x  1)  2
2

y 3  x  2x
2 Vertex (h, k) = (1, 2)

y 3  x  ( 1)  1
2

y  3  ( x  1) 2  1
Application of Quadratic Function
• Determination of maximum or minimum value of
a function
f(x)  ax  bx  c
2
For any quadratic function
 b 
2 2
c
ax
2
 bx  c b
 a  x    2  
 2a  4a a

 b 
2
b  4 ac 
2

 a  x    
 2a 
2
4a 
2
 b  b
2
 4 ac
 a x   
 2a  4a
• f(x)  ax  bx  c
2
may be written as
f(x)  a(x  h) 2  k
where b 4 ac b 2

h  k 
2a , 4a
 Polynomial Functions

A polynomial function is defined by

n 1 n 2 n 3
f(x)  a n x  a n 1 x
n
 a n 2 x  a n 3 x  ...  a 1 x  a 0

where a n , a n 1 , a n 2 , a n 3 ... a 1 , a 0 are coefficients

n is a degree and a nonnegative integer
a k x is a term (monomial).
k

a k is a real number
a n is the leading of the polynomial an  0
• The degree of a polynomial is the highest
exponent of the polynomial
Examples of Polynomial
1. f(x)  x 3  3x 2  4x - 1 is of degree 3.
2 f(x)  3x 2  4x - 1 is of degree 2.
3 f(x)  4x - 1 is of degree 1
4 f(x)  1 is of degree 0
5 f(x)  0 has no degree
• Quadratic , linear and constant functions
are also polynomial
• The domain of a polynomial function is
the set of all real numbers
 The Graph of
f(x)  a x 3  bx 2  cx  d f(x)  a x 3  bx 2  cx  d
y y

x x
 Division of Polynomials
Let f and g be two polynomial functions with g 0
when there exist two unique polynomials q and r such
that f ( x ) r ( x) f ( x)  q( x) g ( x)  r ( x)
 q( x) 
g ( x) g ( x) or
g ( x)  r ( x) 
where quotient
f ( x) x  16 4
g (reminder
x)  x  3x 1
2

Example: Givenf ( x ) and

Find
g ( x)
x
4
 16  21 x  24
 x
2
3x 8  2
x
2
 3 x 1 x  3 x 1

q( x)  x 3x 8
2
r ( x)  21 x  24
Reminder theorem
If a polynomial function f is divided x-c then the
reminder r ( x )  f ( c )

Example: Let f ( x )  x  20 x  97 x  73 x  64
4 3 2

i. Use the reminder theorem to show that x-13

is the factor of f(x)
ii. Find the value of f (13)
Solution
from f ( x ) ; r ( x )  f (c)
x c
f (13 )  13 4  20  13 3  97  13 2  73  13  64
f (13 ) 1
Also
x
3
7x 6x 5 2

x  13 x
4
 20 x  97
3
x
2
 73 x  64
  x  13 x 
4 3

 7 x  97
3
x
2

 7 x 3  91 x 2
6 x  73 x
2

 6 x  78 x  5
2

5 x  64

5x  65
1
Factor theorem
• A polynomial f(x) has a factor x-c if and
only if f(c) = 0
• Example: If f ( x )  x  x  5 x  2
3 2

show that x+2 is a factor of f(x)

• Solution
If x+2 is a factor then f(c) = 0
Then x=-2
f ( 2 )  ( 2 ) 3  ( 2 ) 2  5 ( 2 )  2
f ( 2 )  0
Synthesis Division algorithm
As a faster way to divide f(x) by x-c
Consider the following polynomial function
n 1
f(x)  a n x  a n 1 x
n
 ...  a 1 x  a 0
then
C an a n 1 a n 2 a n 3 ... a1 a0
ca n cb 1 cb 2 ... cb n  2 cb n 1

an b1 b2 ... b n 1 r

where an , b1, b2 … are coefficient of quotient

r is the reminder,r  a o  cb n -1
Example: f(x) = 2x3+3x2- 4 divide by f(5)
Solution. 5 2 3 0 4
10 65 325
2 13 65 321

q( x)  2x
2
 13 x  65
f (5)  321

Zeros of polynomials
• A zero of a polynomial function is a solution of
the equation f(x) = 0
• Example: f ( x )  x  x  2
2

f ( x)  x 3
 Composite Functions
• The composite function f and g denoted by is
i.e.  f(g(x)).
the function defined by f (g(x));fog(x)
• Domain is the value of x for which g(x) is defined
and f (g(x)) is also defined
Example 1: Let f( x )  x , g ( x)  x  3
i) . fog(x)
ii). gof(x)
• Solution
(i).fog(x)  f(g(x))
 g ( x)
 x 3

Domain isx : x  , x  3
(ii). gof(x)  g(f(x))
 f(x)  3
 x 3
Domain is
 x : x  , x  0 
Exponential functions

Definition
Leta  o , a  1 the function
f ( x)  a is called
x

exponential functional.
a 1 xIf
1
x 2  and if ,
Such thatx 1  x 2 thena x  a x that isf ( x )  f ( x )
1 2
1 2

( x )  ab
Generally the exponential function is givenfby x

where a = initial amount,

b=growth/ decay factor
x = time
f(x) = ending amount
 Decay Growth
When a > 0 and 0 < b < 1, When a > 0 and b > 1,
the function models decay. the function models
growth.
(b is called the decay factor) (b is called the growth factor)

f ( x)  ax, a 1 f ( x)  ax, 0  a 1

Exponent growth exponential decay

Population growth:
Example:
• The population of the popular town of Smithville
in 2003 was estimated to be 35,000 people with
an annual rate of increase (growth) of about
2.4%.
a) What is the growth factor for Smithville?
b) Write an equation to model future growth.
c) Use your equation to estimate the
population in 2007 to the nearest hundred
people.

Solution:
a) After one year the population would be
 By factoring we see that this is
35,000(1 + 0.024) or 35,000(1.024).
The growth factor is 1.024. (Remember that
the
growth factor is greater than 1.)
b) Write an equation to model x future growth. x
f ( x )  y  ab  a (1 . 024 )  35 , 500 (1 . 024 )
x

where y is the population; x is the number of

years since 2003
c). Use your equation to estimate the population in
2007 to the nearest hundred people.
f ( x)  ab x  35 , 500 (1 . 024 ) 4  38500
Money:
Marisa invests $300 at a bank that offers 5%
compounded annually.
a)What is the growth factor for the investment?
The growth factor is 1.05. (Remember that
the growth factor is greater than 1.)

b)Write an equation to model the growth of the

investment.

f ( x )  y  ab  300 (1 . 05 )
x x

there y is the money; x is the number of years

since
the initial investment
Continuous growth or decay
• Exponential functions with the base e are often
used to describe continuous growth or decay
y  y0e
kt

• Where y0 = initial amount, y = ending amount

k = constant of proportionality, t = time

Growth Decay
y e x
y e x
1
models growth since e > 1. Model decay since x
y e  x
e
which is between 0
and 1
More Money:
• Most banks compound interest more than once
a year. When interest is compounded n times
per year for t years at an interest rate of r, the
principal, P, grows to the amount A given by the
formula:
 Compound Quarterly:
• Jose invests $500 at a bank offering 10% compounded
quarterly. Find the amount of the investment at the end of
5 years (if untouched).

Compound Continuously:
Tamika invests $500 at a bank offering 10% compounded
continuously. Find the amount of the investment at the end
of 5 years (if untouched).