Exponential growth

Exponential growth

Exponential growth happens when a quantity increases by the same factor over equal
intervals. You can use an exponential function to model exponential growth.

Exponential growth functions can be written in this form:

t
f(t) = a(1 + r)

In this equation, a > 0 and r > 0. The sum 1 + r is called the growth factor.

• a is the initial amount.

• r is the rate of growth expressed as a decimal.
• t is the number of times the growth factor is applied.

Exponential growth functions form curves when graphed. As t increases, f(t) continues
to increase forever. In fact, f(t) increases more and more rapidly as t gets larger and
larger.
f(t)
f(t)
200
200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
tt

11 22 33 44 55 66 77 88

Example of exponential growth

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Exponential growth

Let's try it! The population of Park City is predicted to grow by 10% every 6 years. The
current population is 25,000 people. Write an exponential growth function to model the
population of Park City. Then use the function to predict the population of Park City in
18 years.

t
Use f(t) = a(1 + r) to model the population of Park City. Start by finding the values of
a and r.

• The initial amount is the current population, so a = 25,000.

• The population grows by 10% every 6 years, so the rate of growth is 10% and
r = 0.1.

Now, substitute those values into an exponential growth equation.

f(t) = a(1 + r) t

= t Plug in a = 25,000 and r = 0.1.

25,000(1 + 0.1)

= 25,000(1.1) t

t
So, you can use f(t) = 25,000(1.1) to predict the population of Park City in 18 years.
18
Since the population increases by 10% every 6 years and = 3, the growth factor will
6
be applied 3 times. Substitute t = 3 into the equation.

f(t) = 25,000(1.1) t

= 25,000(1.1) 3 Plug in t = 3.

= 25,000(1.331)

= 33,275

The population of Park City will be about 33,275 people in 18 years.

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Exponential growth

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Compound interest
Compound interest is one application of exponential growth. Compound interest is
interest that is paid both on the principal, or the initial amount in an account, and on
the interest that has already been paid. Interest that is not compounded is called
simple interest. This is the formula for compound interest:

nt
r
A=P 1+
n

• A is the balance of the account.

• P is the principal.
• r is the annual interest rate expressed as a decimal.
• n is the number of times per year the interest is compounded.
• t is the elapsed time in years.

Example of compound interest

Let's try it! Kimi deposits $2,000 into an account that earns 2% annual interest,
compounded every 3 months. Assuming Kimi doesn't deposit or withdraw any money
after her initial deposit, how much money will be in her account after 5 years?

nt
r
Use A = P 1 + to model the balance of Kimi's account. Start by finding the values
n
of P, r, and n.

• The principal is the $2,000 that Kimi deposits, so P = 2,000.

• The interest rate is 2%, so r = 0.02.

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Exponential growth

• The interest is compounded every 3 months, and there are 12 months in a year.
12
So, n = = 4.
3

Now, substitute those values into the compound interest formula.

nt
A= r
P 1+
n

= 4t Plug in P = 2,000, r = 0.02, and n = 4.

0.02
2,000 1 +
4

= 2,000(1 + 0.005) 4t

= 2,000(1.005) 4t

4t
So, you can use A = 2,000(1.005) to find the balance of Kimi's account in 5 years.
Substitute t = 5 into the formula.

A = 2,000(1.005) 4t

= 2,000(1.005) 4 5 Plug in t = 5.

= 2,000(1.005) 20

≈ $2,209.79 Simplify. Round to the nearest cent.

To the nearest cent, there will be $2,209.79 in Kimi's account after 5 years.

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Exponential growth

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Compound interest: word problems QSF

Continuous exponential growth

Exponential growth can also be modeled using the natural base, e. Use e to model
exponential growth when you expect the growth to happen continuously, not at fixed
intervals.

Exponential growth functions using e can be written in this form:

kt
A(t) = A0e

In this equation, A0 > 0 and k > 0.

• A0 is the initial base.

• e is the base of the natural logarithm.
• k is a constant that depends on the growth rate.
• t is the elapsed time.

Example of continuous exponential growth

Let's try it! The population of a bacteria colony doubles every 10 minutes. If the
bacteria colony begins with 60 bacteria, how many bacteria will there be in 75 minutes?

kt
Use A(t) = A0e to model the number of bacteria in the colony. Start by finding the
values of A0 and k. Since the bacteria colony begins with 60 bacteria, A0 = 60.
Substitute that value into the equation.

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Exponential growth

A(t) = A0e kt

Plug in A0 = 60.
A(t) = 60e kt

Now, find the value of k. The population doubles every 10 minutes, so after 10
minutes, the population will be 60 2 = 120 bacteria. Substitute A(t) = 120 and t = 10
into the equation, and then solve for k.

A(t) = 60e kt

Plug in A(t) = 120 and t = 10.

120 = 60e k 10

120 = 60e 10k

Divide both sides by 60.

2 = e 10k

Take the natural logarithm (ln) of both sides.

ln 2 = ln e 10k

ln 2 = 10k
x
Use ln e = x.

Divide both sides by 10.

ln 2 = k
10

Simplify.
0.0693 ≈ k

Substitute 0.0693 for k in the exponential growth equation from before.

A(t) = 60e kt

= 60e 0.0693t Plug in k = 0.0693.

0.0693t
So, you can use A(t) = 60e to find the population of the bacteria in 75 minutes.
Substitute t = 75 into the equation.

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Exponential growth

A(t) = 60e 0.0693t

= 60e 0.0693 75 Plug in t = 75.

≈ 10,849.1776

So, there will be about 10,849 bacteria in 75 minutes.

Continuously compounded interest

Continuously compounded interest is another application of exponential growth. An
account that earns continuously compounded interest is constantly earning interest on
the balance, and the interest is constantly being added to the balance of the account.
This is the formula for continuously compounded interest:
rt
A = Pe

• A is the balance.
• P is the principal.
• e is the base of the natural logarithm.
• r is the annual interest rate expressed as a decimal.
• t is the elapsed time in years.

Example of continuously compounded interest

Let's try it! Malik opened an account and deposited $1,500. The account earns 1%
annual interest, compounded continuously. Assuming Malik does not make any more
deposits or withdrawals after his initial deposit, how much money will be in his account
after 3.5 years?
rt
Use A = Pe to model the balance of Malik's account. Start by finding the values of P
and r.

• The principal is the $1,500 that Malik deposits, so P = 1,500.

• The interest rate is 1%, so r = 0.01.

Now, substitute those values into the formula for continuously compounded interest.

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Exponential growth

A = Pe rt

= 1,500e 0.01t Plug in P = 1,500 and r = 0.01.

0.01t
So, you can use A = 1,500e to find the balance of Malik's account in 3.5 years.
Substitute t = 3.5 into the formula.

A = 1,500e 0.01t

= 1,500e 0.01 3.5 Plug in t = 3.5.

≈ $1,553.43 Simplify. Round to the nearest cent.

So, to the nearest cent, there will be $1,553.43 in Malik's account after 3.5 years.

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Continuously compounded interest: word problems 5GU

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Skills Lessons

Exponential growth and decay: word problems UKG Exponential functions

Compound interest: word problems QSF Exponential decay

Continuously compounded interest: word problems 5GU

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