Exponential Function Series Definition

An alternative definition of the exponential function through infinite series

Motivation

My previous post about the definition of the exponential function has provided no connection between a well-known characterization (or an alternative definition) of the exponential function:

$$\exp(s) = \lim_{n\to\infty} \sum_{k=1}^n \frac{s^k}{k!}.$$

The term to be summed is simpler than the one in the binomial expansion of $(1 + s / n)^n$.

Solution

We want this sum to be as small as possible as $n \to \infty$.

$$\sum_{k=2}^n \left( 1 - \frac{n \cdot \dots \cdot (n + 1 - k)} {\underbrace{n \cdot \dots \cdot n}_{n^k}} \right) \, \frac{x^k}{k!}$$

Observe that the fraction is a product

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limits 

Exponential Function Product Rule

A first definition of exponential and logarithmic functions

Motivation from compound interest

Increase the number of times that the interest is compounded each year ($n$), so as to increase the final amount of money ($A$)

$$A = P \left(1 + \frac{r}{n}\right)^{nt}.$$

$t$ and $r$ are the number of years and the interest rate per annum.

As $n$ becomes large, we can approximate the amount by

$$A = P e^{rt}.$$

The value of $A$ in the above formula is the amount compounded continuously.

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limits