Lesson 6.

2
The Natural Base e

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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

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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.

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Explore It! Approximating the Natural Base e

numbers such as π and i. Another special number is called the natural base and is
Work with a partner. So far in your study of mathematics, you have worked with special

denoted by e.
a. One way to approximate the natural base e is to approximate the sum
1+ + + + +⋯.
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
.
Complete the table. What do x 101 102 103 104 105 106
you notice as x increases?
Use your results to approximate e. Compare this approximation to the one in part (a).

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 Explore It! Approximating the Natural Base e

worked with special numbers such as π and i. Another special number is

Work with a partner. So far in your study of mathematics, you have

called the natural base and is denoted by e.

think the graph of the natural base exponential function y = ex looks

c. You have approximated a value for the natural base e. What do you

like? Explain.

y = ex. Find the domain and range. Make several observations about
d. Use your result in part (a) or part (b) to complete the table. Then graph
CONSTRUCT AN
ARGUMENT the graph.
−2 −1
Do you think the
x 0 1 2
natural base e is
rational or irrational?
Explain.

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

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 The Natural Base e

discovery of special numbers, such as π and i.

The history of mathematics is marked by the
Vocabulary
natural base e, p. 322 Another special number is denoted by the letter
e. The number is called the natural base e.
The expression

approaches e as x increases, as shown in the

graph and table.

x 101 102 103 104 105 106

2.59374 2.70481 2.71692 2.71815 2.71827 2.71828

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KEY
IDEA

The Natural Base e

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

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 Example 1 Simplifying Natural Base Expressions
Simplify each expression.

a. b.

c. d.

SOLUTION
Check
You can use technology b.
a.
to check the equivalence
of numerical expressions
involving e. ¿e 9 ¿ 4e
c. d.

2
¿9 e−8x
9 2ex
¿
e 8x
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1. What is the natural base e?

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Simplify the expression.

2. e7 • e4
3.

5.
−3x 3
4. (10e )

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6. Can the natural base e be written as ? Explain.

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KEY Graphing Natural Base Functions
IDEA

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.

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

(1, 8.15)

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

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

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

7. y =
8. y = 4e−x

9. g(x) = e−4x
10. f(x) = 2e2x

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KEY
IDEA
Solving Real-Life Problems

by A = P . As the frequency n of compounding approaches positive infinity, the

You have learned that the balance of an account earning compound interest is given

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.

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 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

a. Use the formula A = Pert , where P 4600 and r 0.045 to write an

interest formula is I Prt, SOLUTION
where I is the amount of
simple interest, P is the equation that represents the balance of your account over time.
principal, r is the annual
Evaluate the formula when t 5 and t 10.
A = 4600e0.045t
interest rate, and t is time
(in years). So, the amount Continuously Compounded Interest Formula
t = 5: A = 4600e0.045(5)
A in the account after t
5760.68
t= A = 4600e0.045(10) 7214.24
years is given by the
formula
A P Prt P(1 rt).
10: your account has a balance of $5760.68 after 5 years, and a
So,
balance of $7214.24 after 10 years.
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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

t = 5: A = 4800[1 0.05(5)]
10. Compare your answers to the balances of your account in part (a).
6000
t= A = 4800[1 0.05(10)] 7200
10:
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.
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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.

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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.

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 In-Class
Mini-Assessment
Practice
1. Simplify .
2. Simplify .
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?

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