Lesson 6.

2
The Natural Base e

©Big Ideas Learning, LLC

Warm-Up

Determine whether the function represents exponential growth or exponential decay.

Then identify the initial amount and the percent increase or decrease.

y = 28(1.03)x

y = 25,000(0.95)x

©Big Ideas Learning, LLC

Learning Target:
Use the natural base e and graph natural base functions.

Success Criteria:
• I can explain the natural base e.
• I can simplify natural base expressions.
• I can graph natural base functions.
• I can solve real-life problems using exponential growth and decay functions.

©Big Ideas Learning, LLC

Explore It! Approximating the Natural Base e
Work with a partner. So far in your study of mathematics, you have worked with special
numbers such as π and i. Another special number is called the natural base and is
denoted by e.
a. One way to approximate the natural base e is to approximate the sum
1 1 1 1
1+ + + + +⋯.
1 1•2 1•2•3 1•2•3•4
Approximate this sum and explain your method. Then compare your result with those of
your classmates.
b. Another way to approximate the natural base e is to consider the expression
1 x
1+ .
x x 101 102 103 104 105 106
1 x
Complete the table. What do
1+
you notice as x increases? x
Use your results to approximate e. Compare this approximation to the one in part (a).

©Big Ideas Learning, LLC

 Explore It! Approximating the Natural Base e

Work with a partner. So far in your study of mathematics, you have worked
with special numbers such as π and i. Another special number is called the
natural base and is denoted by e.
c. You have approximated a value for the natural base e. What do you
think the graph of the natural base exponential function y = ex looks
like? Explain.
d. Use your result in part (a) or part (b) to complete the table. Then graph
y = ex. Find the domain and range. Make several observations about
CONSTRUCT AN the graph.
ARGUMENT
Do you think the natural x −2 −1 0 1 2
base e is rational or
irrational? Explain. y = ex

e. Repeat part (d) for the natural base exponential function y = e−x.
Compare the graphs of y = ex and y = e−x.

©Big Ideas Learning, LLC

 The Natural Base e
The history of mathematics is marked by the
Vocabulary discovery of special numbers, such as π and i.
natural base e, p. 322 Another special number is denoted by the letter
e. The number is called the natural base e.
The expression
1 x
1+
x
approaches e as x increases, as shown in the
graph and table.

x 101 102 103 104 105 106

1 x
1+ 2.59374 2.70481 2.71692 2.71815 2.71827 2.71828
x

©Big Ideas Learning, LLC

KEY IDEA

The Natural Base e

The natural base e is irrational. It is defined as follows:
1 x
As x approaches +∞, 1 + x approaches e ≈ 2.71828182846.

©Big Ideas Learning, LLC

 Example 1 Simplifying Natural Base Expressions
Simplify each expression.
16e5
a. e3 • e6 b.
4e4
c. (3e−4x)2 d. 4e2x

SOLUTION
Check
16e5
You can use technology a. e3 • e6 = e3 + 6 b. = 4e5 − 4
4e 4
to check the equivalence
of numerical expressions = e9 = 4e
involving e.
c. (3e−4x)2 = 32(e−4x)2 d. 4e2x = 4 ∙ e2x

= 9e−8x = 2 ∙ (e2x )1Τ2

9 = 2ex
= 8x
e
©Big Ideas Learning, LLC
1. What is the natural base e?

©Big Ideas Learning, LLC

Simplify the expression.
24e8
2. e7 • e4 3.
8e5

1 8x
4. (10e−3x)3 5. e
9

©Big Ideas Learning, LLC

 271,801
6. Can the natural base e be written as ? Explain.
99,990

©Big Ideas Learning, LLC

KEY IDEA Graphing Natural Base Functions

Natural Base Functions

A function of the form y = aerx is called a natural base exponential function.
• When a > 0 and r > 0, the function is an exponential growth function.
• When a > 0 and r < 0, the function is an exponential decay function.
The graphs of the basic functions y = ex and y = e−x are shown.

©Big Ideas Learning, LLC

 Example 2 Graphing Natural Base Functions
Determine whether each function represents exponential growth or
exponential decay. Then graph the function.
a. y = 3ex b. f(x) = e−0.5x
SOLUTION
a. Because a = 3 is positive and b. Because a = 1 is positive and
r = 1 is positive, the function is r = −0.5 is negative, the function
DECOMPOSE A
an exponential growth function. is an exponential decay function.
PROBLEM
Show how you can Use a table to graph the function. Use a table to graph the function.
rewrite the function in x −2 −1 0 1 x −4 −2 0 2
Example 2(b) to find the
percent rate of change. y 0.41 1.10 3 8.15 f(x) 7.39 2.72 1 0.37

(-4, 7.39)

(1, 8.15)

(-1, 1.10) (-2, 2.72)

(0, 3) (2, 0.37)
(-2, 0.41) (0, 1)

©Big Ideas Learning, LLC

Determine whether the function represents exponential growth or exponential decay.
Then graph the function.

1
7. y = ex 8. y = 4e−x
2

1 −4x
9. g(x) = e 10. f(x) = 2e2x
3

©Big Ideas Learning, LLC

KEY IDEA

Solving Real-Life Problems

You have learned that the balance of an account earning compound interest is given
r nt
by A = P 1 + . As the frequency n of compounding approaches positive infinity,
n
the compound interest formula approximates the following formula.

Continuously Compounded Interest

When interest is compounded continuously, the amount A in an account after t years is
given by the formula
A = Pert
where P is the principal and r is the annual interest rate expressed as a decimal.

©Big Ideas Learning, LLC

 Example 3 Modeling Real Life
You deposit $4600 in an account that earns 4.5% annual interest compounded
continuously.
a. Find the balance of your account after 5 years and after 10 years.
b. Your friend deposits $4800 in an account that earns simple interest at an
annual rate of 5%. The amount A (in dollars) in the account after t years
is represented by A = 4800(1 + 0.05t). Which account has a greater
balance after 5 years? after 10 years?
Recall that the simple
interest formula is I = Prt, SOLUTION
where I is the amount of a. Use the formula A = Pert , where P = 4600 and r = 0.045 to write an
simple interest, P is the equation that represents the balance of your account over time.
principal, r is the annual
interest rate, and t is time Evaluate the formula when t = 5 and t = 10.
(in years). So, the amount A = 4600e0.045t Continuously Compounded Interest Formula
A in the account after t
years is given by the t = 5: A = 4600e0.045(5) ≈ 5760.68
formula
A = P + Prt = P(1 + rt). t = 10: A = 4600e0.045(10) ≈ 7214.24
So, your account has a balance of $5760.68 after 5 years, and a
balance of $7214.24 after 10 years.
©Big Ideas Learning, LLC
Example 3 Modeling Real Life
You deposit $4600 in an account that earns 4.5% annual interest compounded
continuously.
a. Find the balance of your account after 5 years and after 10 years.
b. Your friend deposits $4800 in an account that earns simple interest at an
annual rate of 5%. The amount A (in dollars) in the account after t years
is represented by A = 4800(1 + 0.05t). Which account has a greater
balance after 5 years? after 10 years?
SOLUTION
b. Evaluate the formula for the balance of your friend’s account when t = 5 and
t = 10. Compare your answers to the balances of your account in part (a).
t = 5: A = 4800[1 + 0.05(5)] = 6000
t = 10: A = 4800[1 + 0.05(10)] = 7200
After 5 years, the balance of your friend’s account is $6000, which is
greater than the balance of your account. After 10 years, the balance of
your friend’s account is $7200, which is less than the balance of your
account.
©Big Ideas Learning, LLC
11. You deposit $4600 in an account that earns 4.5% annual interest compounded quarterly.
Compare the balances after 5 and 10 years with the balances of the accounts in
Example 3.

©Big Ideas Learning, LLC

12. Your friend says that any account earning compound interest will eventually have a
greater balance than any account earning simple interest if enough time passes.
Is your friend correct? Explain.

©Big Ideas Learning, LLC

 In-Class Practice
Mini-Assessment

27e9
1. Simplify .
9e6
2. Simplify 25e16x.
3. Determine whether y = e−0.75x represents exponential growth or
exponential decay. Then graph the function.
4. You deposit $1500 in an account that earns 2.4% annual interest
compounded continuously.
a. Find the balance of your account after 5 years and after 15 years.
b. Your friend deposits $1500 in an account that earns simple interest
at an annual rate of 2.85%. Which account has a greater balance
after 5 years? after 15 years?

©Big Ideas Learning, LLC