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Algebra 9-6 Growth and Decay

We can use exponential functions to help us describe how things in our world
change. Many things increase or decrease at exponential rates, we call these
growth or decay functions.

The general equation for exponential growth is:

y = C(1+ r) t
y = the final amount
C = the initial amount
r = rate ( percent as a decimal)
t = time
Example: Computer use has risen 19% annually since 1980.

1. If 18.9 million
€ computers were in use in 1980, write and equation for the
number of computers in use for t years after 1980.

C = 18.9 million
r = 18.9% = .189 This is the information we are given
t=t

Plug in the values into the formula:



y = C(1+ r) t
y = 18.9(1+ 0.189) t
y = 18.9(1.189) t

This would be the equation used to predict the number of computers in use t
years after 1980.

2. Predict the number of computers in use by 2015.

2015 −1980 = 35 , so t = 35 years. Use the formula:


y = 18.9(1.189) 35
y = 18.9(427.92)
€ y = 8,087.7

So we would expect 8087.7 million (8.087 billion) computers in use by 2015.



A more common use for exponential growth is called compound interest. This
formula is used to calculate a variety of things ranging from investment values to
credit card interest.

⎛ r ⎞ nt
The formula for compound interest is:
A = P⎜1+ ⎟
⎝ n ⎠
A = Current amount
P = Principal (initial amount)
r = rate (percent as a decimal)
n = number of times interest is compounded in a year
€ t = time in years

Example: Determine the amount of an investment if $300 is invested at an
interest rate of 3.5% compounded monthly for 22 years.

1. Identify what you know:


A=?
P = $300 (This is the initial amount)
r = .035 (3.5% as a decimal)
n = 12 (interest is compounded monthly, which is 12 times a year)
t = 22 years
2. Use the formula:
⎛ r ⎞ nt
A = P⎜1+ ⎟
⎝ n ⎠
⎛ .035 ⎞12⋅22
A = 300⎜1+ ⎟
⎝ 12 ⎠
264
A = 300(1+ .0029)
A = 300(1.0029) 264
A = 300(2.157)
A = $647.20

The investment would be worth $647.20 after 22 years.



If something is decreasing at an exponential rate, we call this decay.

The general equation for exponential decay is:

y = C(1 − r) t
If you compare this to the exponential growth formula you will see that it is almost
identical except for the subtraction in place of the addition. The variables still
represent the same things.

Example: During the past several years, the population of Campbell County,
Kentucky, has been decreasing at an average rate of about 0.3% per year. In
2000, its population was 88,647.

1. Write an equation to represent the population since 2000.

C = 88,647
r = .003 This is the information we are given.
t=t

Plug them into the formula:



y = 88647(1 − .003) t
y = 88647(.997) t

This would be the equation for predicting the number of people living in Cambell
County t years after 2000.

2. If the trend continues, predict the population in 2010.

t = 2010 − 2000 = 10 years


y = 88647(.997)10
y = 88647(.970)
y = 86023.2

We would expect Campbell County to have about 86,023 residents in 2010.