Math 1090 Exponential and Logarithmic Project

Example: The table at the right gives the annual premiums Annual premium for
required for a $250,000 20-year term-life insurance policy for Age
20-year policy
nonsmokers of different ages.* 25 year olds $330.33 .
30 year olds $334.54 .
35 year olds $359.78 .
a. To see the scatterplot for this data, use Excel. Enter the 40 year olds $432.36 .
minimum age in Column A and the premium in Column 45 year olds $619.42 .
50 year olds $918.91 .
B. Highlight all the data and click the scatterplot icon 55 year olds $1455.34 .
in the Charts section of the Insert tab. 60 year olds $2492.43 .
65 year olds $4172.01 .

Click the chart when it is created to show the green plus in a box by the top-right corner of the chart.
Click this to make a place to enter the Axis Titles, and to have Excel draw the proper Trendline.
Click the triangle after Trendline and choose More Options . . . then select the Exponential option.
Scroll to the bottom of the panel on the right and check Display Equation on chart.

b. Excel gives the continuously compounded

exponential equation y = 42.012e0.0657x with the 20-year Term-Life Policy Cost
5000
rate of increase in the exponent multiplied with x
annual premium

4000
for the age. If this were given as annually
y = 42.012e0.0657x
compounded increase, the equation would be y = 3000
2000
42.012(1+ 0.0679)x. The rate of increase is slightly
1000
different for continuous and annual compounding,
but the results are essentially the same. 0
0 20 40 60 80
* https://www.valuepenguin.com/average-cost-life-
age
insurance
 c. Use the equation to predict annual premium for a 20-year term-life insurance policy for a
45-year old person: y = 42.012e0.0657 × 45 = $807.91. This prediction is about 30% more
than the actual price paid by a 45-year old person. This difference between the actual
value and the predicted value from the regression equation is called the residual. The
regression equation is the result of mathematically minimizing the residuals of all the
data values to a function.

d. Use the regression equation to predict the age of a person who pays $2500 for the annual
premium of a 20-year term life-life insurance policy for $250,000. Since x represents the
age, solve the equation 2500 = 42.012e0.0657x.
59.5 = e0.0657x
ln 59.5 = 0.0657x
4.086 = 0.0657x
62.19 = x or 62-years old

Exercises

1. The data at the right gives the US national debt in billions of dollars US national debt
since 1930.* year
($1,000,000,000)

a. Use Excel to make the scatterplot letting the year x = 30 represent 1930 16.19
the year 1930. Which regression model is suggested: 1940 42.97
Exponential, Linear, Logarithmic, Polynomial, Power or Other? 1950 257.3
1960 286.3
b. Have Excel find the regression function that best models the data. 1970 370.9
1980 907.7
c. Use the function to predict the national debt for 2017. Look up 1990 3,233
the actual debt and compare it with the prediction from the 2000 5,659
regression function. 2005 7,918
2010 13,551
d. Use the function to predict when the national debt will reach 30
2015 18,138
trillion dollars.
* https://en.wikipedia.org/wiki/National_debt_of_the_United_States#/media/File:USDebt.png
 Population Year
2. The table at the right gives the approximate population of Jasmine, 1,250 1940
New Mexico, in the given years. 3,300 1950
6,600 1960
12,000 1970
a. Use Excel to make the scatterplot showing the population as 21,000 1980
thousands of people and letting y = 40 represent the year 1940. 30,000 1990
45,000 2000
Which regression model is suggested: Exponential, Linear, 60,000 2010
Logarithmic, Polynomial, Power or Other?

b. Have Excel find the regression function that best models the data.

c. Use the function to predict when the population was 50,000. Comment on what the
equation predicted and the population that year according to the chart.

d. Use the function to predict what the population is in 2017.

3. Look back at the table in the example that give the annual premiums for a $250,000
20-year term-life insurance policy.

a. Use Excel to make a scatterplot for just the 55-, 60- and 65-year olds.

b. Have Excel draw the linear regression line and give the linear equation.

c. Compare the actual premiums with the

linear regression and the exponential
regression by completing the table.

d. Which regression would be better to predict the annual premium for a sixty-four old-
old person, and why? Answer in complete sentences.

e. Which regression would be better to predict the annual premium for a twenty-seven
year-old person, and why? Answer in complete sentences.