Essay On Exponential Function
Annisa Sekarizky Anantya
Earning money using math
Introduction
One of the most well known uses of exponential function comes from the subject finance, an exponential function is described as a mathematical function whose value is a constant raised to the power of the known .
It is a function of the form: f(x)=ax Whereby the value of ‘a’ is a constant called the base of the function and is raised to the power of ‘x’ which is a variable.
In finance, when the investment is compounded continuously the formula becomes,
A(t)=Pert
Where P is initial amount invested, r is the annual interest rate and A is the amount of balance in the account after t years.
It becomes this formula through the development of a few simple equations, which is explored in this paper.
The most common use of exponential function is to find the exponential growth of a certain
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Therefore I aim to show how math can be used to earn money in banks through the use of interest rates.
Body
Usually, whenever a person invests in a bank, they are given details on interest rates, be it annually or periodically. I will use my own experience in banking for this paper, therefore I will start with my decision to invest $200 in my local bank. They offer 5% annual interest rate, which means that after each year the bank will pay me 5% of that money I invested or $200(0.05)=$10 in interest so that by the end of the year I will have $210 in your bank account. The assumption above is in sync with the formula of simple interest.
The first equation is,
I=Prt
Which calculates the amount of interest acquired at an annual rate of r on an initial investment of P after t years.
So if my initial investment is $200 and the annual interest rate is 5% after 7 years the money in my bank account will acquire an extra
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