BUSMATH (Business Math)

BUSMATH (Business Math)

Kristine Joy E. Carpio
Department of Mathematics De La Salle University Manila

Term 2 2011-2012

BUSMATH (Business Math)

Outline
Exponential and Logarithmic Functions Exponential Functions and Their Applications Logarithmic Functions and Their Applications Properties of Logarithms Exponential and Logarithmic Equations Geometric Sequence and Series Geometric Sequence Geometric Series References

BUSMATH (Business Math)

Course Description

This course covers the theory of investment mathematics and their application to commerce and economics. This course also introduces students to the rudiments of the mathematics of nance. Special topics in College Algebra that are requisite knowledge in solving investment problems will also be reviewed such as exponential and logarithmic functions and geometric sequence.

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Exponential Functions and Their Applications

Denition
An exponential function is a function of the form f (x) = bx , where b > 0 and b = 1. For many applications the base 10 or e is used. The number e is an irrational number that is approximately 2.718. Base 10 is called the common base and e is called the the natural base.

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Characteristics of the exponential function: 1. The y-intercept of the curve is (0, 1). 2. The domain is (, +) and the range is (0, +). 3. The curve approaches the negative x-axis when b > 1; when 0 < b < 1 the curve approaches the positive x-axis. 4. The curve is increasing from left to right when b > 1; when 0 < b < 1 the curve is decreasing from left to right.

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Exercises

Sketch the graph of each function. 1. y = 10x+2 2. y = 2x 3. y = 2x 4. y = 2(x

2)

5. y = (0.1)x

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Denition
If a function is such that no two ordered pairs have dierent x-coordinates and the same y-coordinate, then the function is called one-to-one function. Functions that are one-to-one are invertible functions.

Denition
The inverse of a one-to-one function f is the function f 1 , which is obtained from f by interchanging the coordinates in each ordered pair of f . One-to-One Property of Exponential Functions: For b > 0 and b = 1, if bm = bn , then m = n .

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Exercises

Solve each equation. 1. 102x = 0.1 1 2. 3x = 9 1 3x 3. = 16 4 4. 10x = 0.01 5. 32x = 81

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Applications
Denition (Compound Interest Formula)
If P represents the principal, i (in decimal form) the annual interest rate, m the number times the interest is compounded in a year, t the number of years, and A the amount at the end of t years, then i mt . A=P 1+ m If the length of the time period is shortened then the number of periods n increases while the interest rate for the period decreases. As n increases, the amount A also increases but will not exceed a certain amount. That certain amount is the amount obtained from continuous compounding of the interest.

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Denition (Continuous-Compounding Formula)

If P is the principal or beginning balance, i (in decimal form) is the annual percentage rate compounded continuously, t is the time in years, and A is the amount of or ending balance, then A = Pe it

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential Functions and Their Applications

Exercises
Solve each problem. 1. If $6000 is deposited in an account paying 5% compounded quarterly, then what amount will be in the account after 10 years? 2. The value of a certain textbook seems to decrease according to the formula V = 45 20.9t , where V is the value in dollars and t is the age of the book in years. What is the book worth when the it is new? What is it worth when it is 2 years old? 3. How much interest will be earned the rst year on $80000 on deposit in an account paying 7.5% compunded continuously?

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

Logarithmic Functions and Their Applications

Denition (logb (x))
For any b > 0 and b = 1, y = logb (x) if and only if by = x.

The inverse of the base-b exponential function f (x) = bx is the base-b logarithmic function f 1 (x). There are two bases for logarithms that are used more frequently than others: They are 10 and e. The base-10 logarithm is called the common logarithm and is usually written as log(x). The base-e algorithm is called the natural algorithm and is usually written as ln(x).

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

Exercises

Evaluate each logarithm. 1. log4 (64) 2. log(1) 3. log1/3 (27) 4. ln

1 e

5. log25 (5)

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

The graphs of a function and its inverse function are symmetric about the line y = x. Because the logarithmic functions are inverses of the exponential functions, their graphs are also symmetric about y = x. Characteristics of the logarithmic function: 1. The x-intercept of the curve is (1, 0). 2. The domain is (0, +) and the range is (, +). 3. The curve approaches the negative y-axis when b > 1; when 0 < b < 1 the curve approaches the positive y-axis. 4. The curve is increasing from left to right when b > 1; when 0 < b < 1 the curve is decreasing from left to right.

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

Exercises

Sketch the graph of each function. 1. y = log3 (x) 2. y = log4 (x) 3. y = log1/4 (x) 4. y = log1/5 (x) 5. y = log10 (x)

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

Exercises
One-to-One Property of Logarithmic Functions: For b > 0 and b = 1, if logb (m) = logb (n), then m = n. Solve each equation. 1. log(x) = 3 2. logx (36) = 2 3. log(x 2 ) = log(9) 4. ln(2x 3) = ln(x + 1) 1 2 5. x = 2

BUSMATH (Business Math) Exponential and Logarithmic Functions Logarithmic Functions and Their Applications

Exercises
Solve each problem. 1. How long does it take $5000 to grow to $10000 at 12% compounded continuously? 2. An investment of $10000 in Baytex Energy in 1997 was worth $19,568 in 2002.

a) Assuming that the investment grew continuously, what was the annual rate? b) If Baytex Energy continued to grow continuously at the rate from part a), then what would be the investment be worth in 2012?
3. The level of sound in decibels (dB) is given by the formula L = 10 log(I 1012 ), where I is the intensity of the sound in watts per square meter. If the intensity of the sound of a rock concert is 0.001 watt per square meter at a distance of 75 meters from the stage,then what is the level of the sound at this point from the audience?

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Change-of-Base Formula

Let a, b and x be positive real numbers such that a = 1 and b = 1. Then loga x can be converted to a dierent base as follows. Base b logb x loga x = logb a Base 10 log x loga x = log a Base e ln x loga x = ln a

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Exercises

Rewrite the algorithm as a ratio of (a) common logarithm and (b) natural logarithm 1. log3 x 2. log1/3 x 3. logx
3 4

4. log7.1 x

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Properties of Logarithms
If M , N , and b are positive numbers, b = 1, then 1. logb (b) = 1 2. logb (1) = 0

Theorem (Product Rule for Logarithms)

If M , N , and b are positive numbers, b = 1, then logb (MN ) = logb (M ) + logb (N )

Theorem (Quotient Rule for Logarithms)

If M , N , and b are positive numbers, b = 1, then logb M N = logb (M ) logb (N )

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Theorem (Power Rule for Logarithms)

If M , N , and b are positive numbers, b = 1, then logb (M N ) = N logb (M )

Theorem (Inverse Properties)

If M , N , and b are positive numbers, b = 1, then 1. logb (bM ) = M 2. blogb (M ) = M

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Exercises
Use the properties of logarithms to rewrite and simplify the logarithmic expression. 1. log2 (42 34 ) 9 2. log 300 3. ln e62 Find the exact value of the logarithmic expression without using a calculator. 1 1. log5 125 2. log6 3 6 3. log3 810.2 4. log2 (16) 5. 3 ln e 4 4 6. ln e 3 7. 2 ln e 6 ln e 5 8. log4 2 + log4 32

BUSMATH (Business Math) Exponential and Logarithmic Functions Properties of Logarithms

Exercises
Use the properties of logarithms to expand the expression as a sum, dierence, and/or constant multiple of logarithms. (Assume all varaibles are positive.) 1. log3 10z 2. log6 z1 3 3. log 4x 2 y 4. ln x6 +1 2
xy 5. log2 z 4 Condense the expression to the logarithm of a single quantity 1. ln5 8 log5 t 2. 4 log6 2x 3. 3 log3 x + 4 log3 y 4 log3 z 4. 2 [3 ln x ln(x + 1) ln(x 1)]
4

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential and Logarithmic Equations

Exponential and Logarithmic Equations

Strategies for Solving Exponential and Logarithmic Equations 1. Rewrite the original equation in a form that allows the use of the One-to-One Properties of exponential and logarithmic functions. 2. Rewrite an exponential equation in logarithmic form and apply the Inverse Property of logarithmic functions. 3. Rewrite an logarithmic equation in exponential form and apply the Inverse Property of exponential functions. One-to-One Properties a x = a y if and only if x = y loga x = loga y if and only if x = y Inverse Properties a loga x = x loga a x = x

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential and Logarithmic Equations

Exercises
Solve the exponential equation algebraically. 1. e x = e x 2. 4e x = 91 3. 65x = 3000 4. 2x3 = 32 5. 5(10x6 ) = 7 6. e 2x = 50 7. 14 + 3e x = 11 9. 10.
400 1+e x
2 2 2x

8. e 2x 5e x + 6 = 0 = 350 4
2.471 40 9t

= 21

BUSMATH (Business Math) Exponential and Logarithmic Functions Exponential and Logarithmic Equations

Exercises
Solve the logarithmic equation algebraically. 1. ln x = 2 2. log 3z = 2 3. ln x 8 = 5

4. 5 log10 (x 2) = 11

5. ln x + ln(x + 3) = 1 6. log(x 6) = log(2x + 1) 7. log3 x + log3 (x 8) = 2

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

Geometric Sequence

Denition
A series is geometric if the ratios of consecutive terms are the same. So, the sequence a1 , a2 , a3 , a4 , . . . , an , . . . is geometric if there is a number r such that a2 = r, a1 a3 = r, a2 a4 = r, a3 r =0

and so the number r is the commone ratio of the sequence.

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

Exercises

Determine whether the sequence is geometric. If so, nd the common ratio. 1. 3, 12, 48, 192, . . . 2. 36, 27, 18, 9, . . . 3. 5, 1, 0.2, 0.04, . . .
8 4. 9, 6, 4, 3 , . . .

5.

1 2 3 4 5, 7, 9, 9, . . .

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

The nth Term of a Geometric Sequence

Denition
The nth term of a geometric sequence has the form an = a1 r n , where r is the common ratio of consecutive terms of the sequence.

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

Exercises
Write the rst ve terms of the geometric sequence. 1. a1 = 6, r = 2 2. a1 = 1, r =
1 3

3. a1 = 6, r = 1 4 4. a1 = 3, r = 5 5. a1 = 5, r = 2x Write an expression for the nth term of the geometric sequence. Then nd the indicated term.
3 1. a1 = 5, r = 2 , n = 8

2. a1 = 64, r = 1 , n = 10 4 3. a1 = 1, r = 3, n = 8 4. a1 = 1000, r = 1.005, n = 60

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

Summation Notation
Denition
The sum of rst n terms of a sequence is represented by
n i=1

ai = a1 + a2 + a3 + a4 + + an ,

where i is called the index of summation, n is the upper limit of summation, and 1 is the lower limit of summation. Properties of Sums 1. 2. 3. 4.
n i=1 c = cn, c is a constant. n n i=1 ai , c is a constant. i=1 cai = c n n n i=1 bi i=1 ai + i=1 (ai + bi ) = n n n i=1 bi i=1 ai i=1 (ai bi ) =

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

The Sum of a Finite Geometric Sequence

Denition
The sum of the nite geometric sequence a1 , a1 r, a1 r 2 , a1 r 3 , a1 r 4 , . . . , a1 r n1 with common ratio r = 1 is given by n Sn = n a1 r i1 = a1 1r i=1 1r

BUSMATH (Business Math) Geometric Sequence and Series Geometric Sequence

Exercises
Find the sum of the nite geometric sequence. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
10 n=1 8 n=1 5 10 i=1 2 5 2 n1 3 2 1 4 n1

i1

i1 12 1 i=1 16 2 n 40 3 n=0 5 5 n 20 1 n=0 10 5 n 6 n=0 500 (1.04) n1 50 2 n=0 10 3 i 25 1 i=0 8 2 i1 100 2 i=0 15 3

BUSMATH (Business Math) Geometric Sequence and Series Geometric Series

Geometric Series
The summation of the terms of an innite geometric sequence is called an innite geometric sequence or simply a geometric sequence.

Denition
If |r| < 1, the innite geometric series a1 + a1 r + a1 r 2 + a1 r 3 + + a1 r n1 + has the sum S=
i=0

a1 r i =

a1 . 1r

BUSMATH (Business Math) Geometric Sequence and Series Geometric Series

Exercises
Find the sum of the innite geometric sequence. 1. 2. 3. 4. 5. 6. 7.
n=0 2 n=0 2 2 3 n n

n 1 n=0 10 n n=0 4 (0.2) n n=0 10 (0.2) 8 9 + 6 + 4 + 3 + 125 + 25 5 + 6 36 6

2 3

BUSMATH (Business Math) References

References
1. M.J. Acelajado, Y.B. Beronque and F.F. Co. Algebra: Concepts and Processes. National Bookstore, Third Edition, 2005. 2. M. Dugopolski. Algebra for College Students. McGraw-Hill Publishing Company, Fourth Edition, 2006. 3. G. Fuller. College Algebra. Litton Educational Publishing, Inc., Fourth Edition, 1977. 4. P.K. Rees, F.W. Sparks and C.S. Rees. College Algebra. McGraw-Hill Publishing Company, Tenth Edition, 1990. 5. E.P. Vance. Modern College Algebra. Addison-Wesley Publishing Company, Inc., Third Edition, 1975.