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EXPONENTIAL GROWTH 4th Year Level Cristina P. David ERNESTO RONDON HIGH SCHOOL Target Group: 4th Year Level Duration : 50 minutes Prerequisite Skill: Exponential Function 2 OBJECTIVES: At the end of the lesson, the students shall be able to: Define exponential growth Differentiate between simple and compound interest Compute for the final amount of compound interest and population growth. 3 HOW DO BACTERIA MULTIPLY? 4 www.wadsworth.org DEMONSTRATING EXPONENTIAL GROWTH fym.la.asu.edu 5 www.ultimatedisney... www.sd4history.com ANOTHER EXAMPLE OF EXPONENTIAL GROWTH 6 MORE EXAMPLES OF EXPONENTIAL GROWTH multi-level networking social networking 7 compound interest IN YOUR OWN WORDS , DEFINE EXPONENTIAL GROWTH 1. 2. 3. 4. 5. 8 RECALL EXPONENTIAL FUNCTION Definition: If b>0 and b ≠ 1, and k is a constant, then y = kbx , where x is a real number, is called an exponential function with base b. 9 SAMPLE PROBLEM The number of bacteria in a culture is given by the function y= 50(2t) where t is the number of hours after the start of observation. Find the number of bacteria in the culture : a.) at the start of observation b.) 3 hours later image.spreadshirt... 10 SOLUTION: Given y = 50(2t) a. At the start, t = 0. Putting t = 0 into the function, y = 50(20) = 50(1) = 50 hence the number of bacteria at the start is 50. b. When t = 3 y = 50 (23) = 50 (8) = 400 hence the number of bacteria after 3 hours is 400. 11 ANOTHER FORM OF EXPONENTIAL FUNCTION The Exponential Growth is in the form y = P( 1 + r)t where P = original number or amount r = rate of change t = unit of time y = total number or amount after t years ( Party or Pretty) 12 EXAMPLE NO. 2 A certain city has a population of 200,000 and a growth rate of 2.5%.What will be the expected population after 3 years? telegraph.co.uk 13 SOLUTION: Given: P = 200,000 r = 2.5 % or .025 t = 3 yrs. Find : y Using the formula y = P( 1 + r)t and substituting the given : y = 200,000 ( 1.025)3 = 200,000 ( 1.076891) = 215,378 Therefore after 3 years, the population will be 215,378. 14 COMPOUND INTEREST Do watch the ffg. videos and take note how compound interest is computed compared to simple interest. Compound Interest VS Simple Interest www.nycon.org/joinus/index.asp www.mahalo.com/answers/money/h 15 TASKS: Sammy deposited $2000 in a bank that pays 5% per annum. Complete the table below and make a graph showing the two kinds of interest . Year Simple Interest Principal Interest Final Amount Compound Interest Principal Interest Final Amount 1 2 3 4 5 16 GRAPH F I N A L A M O U N T 3000 2500 2000 Simple Interest 1500 Compound Interest 1000 500 0 1 2 3 4 5 17 YEAR Year Simple Interest Compound Interest Principal Interest Final Amount Principal Interest Final Amount 1 2000 100 2100 2000 100 2100 2 2000 200 2200 2100 105 2205 3 2000 300 2300 2205 110.25 2315.25 4 2000 400 2400 2315.25 115.76 2431.01 5 2000 500 2500 2431.01 121.55 2552.56 10 15 20 25 18 GRAPH F I N A L 8000 7000 6000 5000 Simple Interest Compound Interest 4000 A M O U N T 3000 2000 1000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 YEAR 19 QUESTIONS 1. Describe the changes in the simple interest and the compound interest as the period of time increases. 2. After how many years will the balance be at least double the original principal if the interest is calculated using : a. simple interest b. compound interest 20 MORE QUESTIONS… 3. If the interest rate increases, what can you observe from the balance –year graph? 4. If the amount will be compounded semiannually, what can you observe on the same graph? Can we still use the same formula in no.2? 21 EXPLAIN IN YOUR OWN WORDS WHAT THE NARRATOR MEANS BY HIS MORAL STORY Earn compound interest. Don’t pay it. 22 FORMULA FOR COMPOUND INTEREST Compound Interest Formula A = P(1 + r/n)nt where A = the final amount P = principal r = rate of interest n = no. of compounding in a year t = time or no.of years (Apparent or A parent) 23 NUMBER OF COMPOUNDING IN A YEAR A certain principal or deposit can be compounded annually, semi-annually, quarterly, monthly, bi-monthly or even daily. For a given kind of compounding in a year, we use the ff. for the value of n: n = 1 (annually or yearly) n = 2 ( semi-annually or bi-annually) n = 4 ( quarterly) n = 12 ( monthly) 24 EXAMPLE NO.3 Mr. Sy deposited an amount of Php 500,000 at Banco De Oro which gives 3% interest compounded annually. How much will be his money after 5 years? Compute for the final amount if the bank will compound his money: a. semi-annually b. quarterly c. monthly cdn4.wn.com 25 SOLUTION a. Given: P = 500,000 r = 3% or .03 n=2 t=5 Find: A To solve for A: Use the Apparent formula A = P(1+r/n)nt = 500,000(1+.03/2)2(5) = 500,000(1.015)10 = 500,000(1.160541) = 580,270.41 26 b. Using the same given facts in (a) except for n. Since compounding is done quarterly, n = 4. To solve for A: (Use the same apparent formula) A = 500,000(1+.03/4)4(5) = 500,000(1.0075)20 = 500,000(1.161184) = 580,592.07 c.Using n=12 since interest is compounded monthly A = 500,000(1+.03/12)12(5) = 500,000(1.0025)60 = 580,808.39 27 ANY QUESTION? Based on the given example, which scenario or method of compounding will yield a higher interest? 28 EVALUATION Three banks made the following offers to their customers. If you are to deposit your money, which of the following banks do you think will give you the best deal? compounded annually 3% interest 5 years P 29 2% interest 3 years P n =4 2.5 % interest compounded monthly 2 years cdn4.wn.com 30 ASSIGNMENT 1. Visit at least 3 banks nearest to your community. (in a mall for example) and ask an officer regarding the rate of interest and the method of compounding. 2. Using a specific number of years and amount to be invested or deposited, compare the final amount and decide which bank offers the great deal. 3. Ask your parent if they have a credit card or have experienced obtaining a loan from a lending institution and ask them the rate of interest and how compounding is done. 31 FIN