#### Module 4 – Exponential and Logarithmic Functions

### Section 4.2 – The Number *e* and ‘Natural’ Exponential Functions

#### Introduction

This section introduces a special number
with many important properties. The first place we’ll see it is in the study of
compound interest when the frequency of compounding is taken to be very large.

#### Study Plan

1. Review
the compound interest examples from section 4.1 of the text – especially the
idea of compounding more than once per year. Note that with a fixed nominal
annual interest rate, if we compound more frequently the interest given each
time is less but it is given proportionately more often, and in fact more
frequent compounding actually yields a bigger result.

2. Use
the Reading Guide to guide your reading of section 4.2 of the text.

3. Read
the following Summary Notes and Discussion, and
make sure that you have absorbed the main points by answering the questions.

4. Follow
the instructions regarding Further Practice until
satisfied that you have met the Learning Objectives
for this section. Then proceed to the next one.

####

Go To: Sec 4.0 Sec 4.1 Sec 4.2
Sec 4.3
Sec 4.4
Sec 4.5
Lab