Although this is a differential equation topic, many students come across this topic while studying basic integrals. You do not need to know anything other than integrals to understand where the equations come from. If you are given the equation and not expected to derive it, you need only logarithms and algebra to work many problems.
quick notes 

rate of change is proportional to quantity \( y' = ky ~~~ \to ~~~ y = Ae^{kt} \) 
You will definitely need to be sharp with your logarithms for this topic. The precalculus logarithms page will help you get up to speed. 
The population dynamics page expands on this discussion of exponential growth and decay applied specifically to population change. 
What Does Exponential Growth/Decay Mean?
What does it mean for something to grow or decay exponentially? The idea is that the independent variable is found in the exponent rather than the base. For example, comparing \(f(t)=t^2\) and \(g(t)=2^t\), notice that \(t\) is in the exponent of the \(g(t)\), so \(g(t)\) is considered an example of exponential growth but \(f(t)\) is not (since \(t\) is not in the exponent).
The general form of an exponential growth equation is \(y = a(b^t)\) or \(y=a(1+r)^t\). These equations are the same when \(b=1+r\), so our discussion will center around \(y = a(b^t)\) and you can easily extend your understanding to the second equation if you need to.
When \(b > 1\), we call the equation an exponential growth equation.
When \(b < 1\), it is called exponential decay.
When \(b = 1\), we have \(y=a(1^t)=a\), which is just linear equation and it is not considered an exponential equation.
So it is easy to see that we have the same equation in both cases and the value of \(b\) tells us if the exponential is growing or decaying. Let's watch a quick video before we go on.
video by PatrickJMT 

A Special Type of Exponential Growth/Decay
A specific type of exponential growth is when \(b=e^{rt}\) and \(r\) is called the growth/decay rate. The equation comes from the idea that the rate of change is proportional to the quantity that currently exists. This produces the autonomous differential equation
autonomous equation 

A special type of differential equation of the form \(y' = f(y)\) where the independent variable does not explicitly appear in the equation. 
\( y' = ky \) 
where \(k\) is a constant called the growth/decay constant/rate.
When \(k < 0\), we use the term exponential decay.
When \(k > 0\), we use the term exponential growth.
To solve this differential equation, there are several techniques available to us. We will use separation of variables. Although not explicitly written in this equation, the independent variable we usually use in these types of equations is t to represent time.
\[\begin{array}{rcl}
y' & = & ky \\
\displaystyle{\frac{dy}{dt} } & = & ky \\
\displaystyle{\frac{dy}{y} } & = & k~dt \\
\displaystyle{\int{ \frac{dy}{y} }} & = & \displaystyle{\int{ k~dt }} \\
\lny & = & kt+C \\
e^{\lny} & = & e^{kt+C} \\
y & = & Ae^{kt}
\end{array}\]
The constant A is usually called the initial amount since at time \(t=0\), we have \(y = Ae^0 = A\).
The key to solving these types of problems usually involves determining \(k\). Depending on what your instructor wants, you can usually just start with the equation \(y = Ae^{kt}\), if you know that you have an exponential decay or growth problem.
Here is a quick video explaining this and showing a graph to give you a feel for these equations.
video by Brightstorm 

HalfLife
Halflife is the time it takes for half the substance to decay. The idea is to take the equation \(y = Ae^{kt}\), set the left side to \(A/2\) and solve for t. Notice that you don't have to know the initial amount A since in the equation \(A/2 = Ae^{kt}\), the A cancels leaving \(1/2 = e^{kt}\). You can then use basic logarithms to solve for t.
Uniqueness of Solution
So it may not have occurred to you but have you thought that maybe it is possible there is another solution to the differential equation \(x'=ax\)? This question is part of a very deep discussion in differential equations involving existence and uniqueness. Here is a really good video that shows that the solution discussed on this page is unique.
video by Dr Chris Tisdell 

Practice
Suppose that the halflife of a certain substance is 20 days and there are initially 10 grams of the substance. How much remains after 75 days?
Problem Statement 

Suppose that the halflife of a certain substance is 20 days and there are initially 10 grams of the substance. How much remains after 75 days?
Final Answer 

The amount of the substance after 75 days is approximately \(0.743\) grams.
Problem Statement 

Suppose that the halflife of a certain substance is 20 days and there are initially 10 grams of the substance. How much remains after 75 days?
Solution 

The equation we use is \( A(t) = A_0 e^{kt} \) where
\(A(t)\) is the amount of the substance at time t in grams
\(A_0\) is the initial amount in grams
k is the decay rate constant
time t is in days
From the problem statement, we know that \(A_0 = 10g\). In order to answer the question about how much remains after 75 days, we use the halflife information to determine the constant k.
The statement that the halflife of the substance is 20 days tells us that in 20 days, half of the initial amount remains. That would be \(10/2=5\) grams at time \(t=20\) days. We can substitute both of those values into the original \(A(t)\) equation and see if it helps us.
\( 5 = 10 e^{20k} \)
Notice that we are left with just one unknown here, k, so we can solve for it.
\(\displaystyle{\begin{array}{rcl} 5 & = & 10 e^{20k} \\ 1/2 & = & e^{20k} \\ \ln(1/2) & = & \ln(e^{20k}) \\ \ln(1)  \ln(2) & = & (20k) \ln(e) \\ \ln(2) & = & 20k \\ \ln(2)/20 & = & k \end{array} }\)
Now that we know the value of k, our equation is \(\displaystyle{ A(t) = 10 e^{t\ln(2)/20} }\)
So, we have an equation that tells us the amount of the substance at every time t. To determine the amount of the substance after 75 days, we just let \(t=75\) in this last equation. This gives us
\(\displaystyle{ A(75) = 10 e^{75\ln(2)/20} \approx 0.743 }\) grams.
See the logarithms page for a review of the logarithm rules we used above.
Final Answer 

The amount of the substance after 75 days is approximately \(0.743\) grams. 
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Suppose that radioactive ionX decays at a constant annual rate of 4%. What is the halflife of the substance when the initial amount is 100g?
Problem Statement 

Suppose that radioactive ionX decays at a constant annual rate of 4%. What is the halflife of the substance when the initial amount is 100g?
Final Answer 

approximately 16.98 years
Problem Statement 

Suppose that radioactive ionX decays at a constant annual rate of 4%. What is the halflife of the substance when the initial amount is 100g?
Solution 

video by PatrickJMT 

Final Answer 

approximately 16.98 years 
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Suppose a bacteria population starts with 10 bacteria and that they divide every hour.
a. What is the population 7 hours later?
b. When will there be 1,000,000 bacteria?
Problem Statement 

Suppose a bacteria population starts with 10 bacteria and that they divide every hour.
a. What is the population 7 hours later?
b. When will there be 1,000,000 bacteria?
Final Answer 

a. 1280 bacteria; b. 16.6 hours
Problem Statement 

Suppose a bacteria population starts with 10 bacteria and that they divide every hour.
a. What is the population 7 hours later?
b. When will there be 1,000,000 bacteria?
Solution 

video by PatrickJMT 

Final Answer 

a. 1280 bacteria; b. 16.6 hours 
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A radioactive material is know to decay at a yearly rate of 0.2 times the amount at each moment. Suppose there are 1000 grams of the material now. What is the amount after 10 years?
Problem Statement 

A radioactive material is know to decay at a yearly rate of 0.2 times the amount at each moment. Suppose there are 1000 grams of the material now. What is the amount after 10 years?
Final Answer 

135 grams
Problem Statement 

A radioactive material is know to decay at a yearly rate of 0.2 times the amount at each moment. Suppose there are 1000 grams of the material now. What is the amount after 10 years?
Solution 

video by PatrickJMT 

Final Answer 

135 grams 
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Suppose a material decays at a rate proportional to the quantity of the material and there were 2500 grams 10 years ago. If there are 2400 grams now, what is the halflife?
Problem Statement 

Suppose a material decays at a rate proportional to the quantity of the material and there were 2500 grams 10 years ago. If there are 2400 grams now, what is the halflife?
Final Answer 

The halflife is approximately 169.8 years.
Problem Statement 

Suppose a material decays at a rate proportional to the quantity of the material and there were 2500 grams 10 years ago. If there are 2400 grams now, what is the halflife?
Solution 

Since the material decays proportional to the quantity of the material, the equation we need is \(A(t) = A_0e^{kt}\). With the given information we need to determine the decay rate, k. Then use that to help us determine the time \(t\) when the quantity is \((1/2)A_0\) (since we need to know the HALF life, i.e. the time when half the material remains).
Given   at \(t=0\), \(A=2500g\) so \(A_0 = 2500\)
Also given   \(t=10\), \(A(10) = 2400g\)
Use this to determine k.
\(\begin{array}{rcl} 2400 & = & 2500 e^{k(10)} \\ \displaystyle{\frac{24}{25}} & = & e^{10k} \\ \ln(24/25) & = & 10k \\ 0.1\ln(24/25) & = & k \end{array} \)
Half of the initial amount is \(2500/2 = 1250\), so we have \(\displaystyle{ 1250 = 2500 e^{0.1t\ln(24/25)} }\)
and we need to solve for \(t\).
\(\begin{array}{rcl} 1250 & = & 2500 e^{0.1t\ln(24/25)} \\ 0.5 & = & e^{0.1t\ln(24/25)} \\ \ln(0.5) & = & 0.1t\ln(24/25) \\ t & = & \displaystyle{\frac{\ln(0.5)}{0.1\ln(24/25)}} \\ & \approx & 169.8 ~ \text{years} \end{array} \)
Final Answer 

The halflife is approximately 169.8 years. 
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Suppose a bacteria population grows at a rate proportional to the population. There were 200 bacteria 3 days ago and 1000 bacteria 1 day ago. How many bacteria will there be tomorrow?
Problem Statement 

Suppose a bacteria population grows at a rate proportional to the population. There were 200 bacteria 3 days ago and 1000 bacteria 1 day ago. How many bacteria will there be tomorrow?
Final Answer 

5000 bacteria
Problem Statement 

Suppose a bacteria population grows at a rate proportional to the population. There were 200 bacteria 3 days ago and 1000 bacteria 1 day ago. How many bacteria will there be tomorrow?
Solution 

video by PatrickJMT 

Final Answer 

5000 bacteria 
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A bacteria population increases sixfold in 10 hours. Assuming normal growth, how long did it take for their population to double?
Problem Statement 

A bacteria population increases sixfold in 10 hours. Assuming normal growth, how long did it take for their population to double?
Final Answer 

3.87 hours
Problem Statement 

A bacteria population increases sixfold in 10 hours. Assuming normal growth, how long did it take for their population to double?
Solution 

video by Krista King Math 

Final Answer 

3.87 hours 
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What is the halflife of Radium226 if its decay rate is 0.000436? Assume time is in years.
Problem Statement 

What is the halflife of Radium226 if its decay rate is 0.000436? Assume time is in years.
Final Answer 

t = 1590 yrs
Problem Statement 

What is the halflife of Radium226 if its decay rate is 0.000436? Assume time is in years.
Solution 

video by Krista King Math 

Final Answer 

t = 1590 yrs 
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Carbon14 has a halflife of 5730 years.
a) If the initial amount is 300g, how much is left after 2000 years?
b) If the initial amount is 400g, when will there be 350g left?
Problem Statement 

Carbon14 has a halflife of 5730 years.
a) If the initial amount is 300g, how much is left after 2000 years?
b) If the initial amount is 400g, when will there be 350g left?
Final Answer 

a) 236g;
b) 1112 years
Problem Statement 

Carbon14 has a halflife of 5730 years.
a) If the initial amount is 300g, how much is left after 2000 years?
b) If the initial amount is 400g, when will there be 350g left?
Solution 

video by Khan Academy 

Final Answer 

a) 236g; 
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Find the halflife of a compound where the decay rate is 0.05. (time is in years)
Problem Statement 

Find the halflife of a compound where the decay rate is 0.05. (time is in years)
Final Answer 

t = 13.86 years
Problem Statement 

Find the halflife of a compound where the decay rate is 0.05. (time is in years)
Solution 

video by Khan Academy 

Final Answer 

t = 13.86 years 
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After 1000 years, we have 500 grams of a substance with a decay rate of 0.001. What was the initial amount?
Problem Statement 

After 1000 years, we have 500 grams of a substance with a decay rate of 0.001. What was the initial amount?
Final Answer 

1355 grams
Problem Statement 

After 1000 years, we have 500 grams of a substance with a decay rate of 0.001. What was the initial amount?
Solution 

video by Khan Academy 

Final Answer 

1355 grams 
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Suppose a radioactive substance decays at a rate of 3.5% per hour. What percent of the substance is left after 6 hours?
Problem Statement 

Suppose a radioactive substance decays at a rate of 3.5% per hour. What percent of the substance is left after 6 hours?
Final Answer 

80.75%
Problem Statement 

Suppose a radioactive substance decays at a rate of 3.5% per hour. What percent of the substance is left after 6 hours?
Solution 

He works this problem a little differently in the video than you may have seen before.
The way to work this problem using the standard equation \(A(t) = A(0)e^{kt}\) is to determine that \(k = \ln(0.965)\) and then set \(A(6) = aA(0)\) and solve for a.
video by Khan Academy 

Final Answer 

80.75% 
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A bacteria culture initially contains 100 cells and grows at a rate proportional to its size. After an hour the population has increased to 420.
a. Find an expression for the number of bacteria after t hours.
b. Find the number of bacteria after 3 hours.
c. Find the rate of growth after 3 hours.
d. When will the population reach 10,000?
Problem Statement 

A bacteria culture initially contains 100 cells and grows at a rate proportional to its size. After an hour the population has increased to 420.
a. Find an expression for the number of bacteria after t hours.
b. Find the number of bacteria after 3 hours.
c. Find the rate of growth after 3 hours.
d. When will the population reach 10,000?
Final Answer 

a. \(\displaystyle{ A(t) = 100e^{t \ln(4.20)} }\) bacteria
b. \(7409\) bacteria
c. \(10 632\) bacteria/hr
d. 3.21 hours
Problem Statement 

A bacteria culture initially contains 100 cells and grows at a rate proportional to its size. After an hour the population has increased to 420.
a. Find an expression for the number of bacteria after t hours.
b. Find the number of bacteria after 3 hours.
c. Find the rate of growth after 3 hours.
d. When will the population reach 10,000?
Solution 

video by Khan Academy 

Final Answer 

a. \(\displaystyle{ A(t) = 100e^{t \ln(4.20)} }\) bacteria 
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You CAN Ace Differential Equations
these topics are not required for this page but will help you understand where the equations come from 
external links you may find helpful 

Math Insight  Exponential Growth and Decay: A Differential Equation 
The Unit Circle
The Unit Circle [wikipedia]
Basic Trig Identities
Set 1  basic identities  

\(\displaystyle{ \tan(t) = \frac{\sin(t)}{\cos(t)} }\) 
\(\displaystyle{ \cot(t) = \frac{\cos(t)}{\sin(t)} }\) 
\(\displaystyle{ \sec(t) = \frac{1}{\cos(t)} }\) 
\(\displaystyle{ \csc(t) = \frac{1}{\sin(t)} }\) 
Set 2  squared identities  

\( \sin^2t + \cos^2t = 1\) 
\( 1 + \tan^2t = \sec^2t\) 
\( 1 + \cot^2t = \csc^2t\) 
Set 3  doubleangle formulas  

\( \sin(2t) = 2\sin(t)\cos(t)\) 
\(\displaystyle{ \cos(2t) = \cos^2(t)  \sin^2(t) }\) 
Set 4  halfangle formulas  

\(\displaystyle{ \sin^2(t) = \frac{1\cos(2t)}{2} }\) 
\(\displaystyle{ \cos^2(t) = \frac{1+\cos(2t)}{2} }\) 
Trig Derivatives
\(\displaystyle{ \frac{d[\sin(t)]}{dt} = \cos(t) }\) 
\(\displaystyle{ \frac{d[\cos(t)]}{dt} = \sin(t) }\)  
\(\displaystyle{ \frac{d[\tan(t)]}{dt} = \sec^2(t) }\) 
\(\displaystyle{ \frac{d[\cot(t)]}{dt} = \csc^2(t) }\)  
\(\displaystyle{ \frac{d[\sec(t)]}{dt} = \sec(t)\tan(t) }\) 
\(\displaystyle{ \frac{d[\csc(t)]}{dt} = \csc(t)\cot(t) }\) 
Inverse Trig Derivatives
\(\displaystyle{ \frac{d[\arcsin(t)]}{dt} = \frac{1}{\sqrt{1t^2}} }\) 
\(\displaystyle{ \frac{d[\arccos(t)]}{dt} = \frac{1}{\sqrt{1t^2}} }\)  
\(\displaystyle{ \frac{d[\arctan(t)]}{dt} = \frac{1}{1+t^2} }\) 
\(\displaystyle{ \frac{d[\arccot(t)]}{dt} = \frac{1}{1+t^2} }\)  
\(\displaystyle{ \frac{d[\arcsec(t)]}{dt} = \frac{1}{\abs{t}\sqrt{t^2 1}} }\) 
\(\displaystyle{ \frac{d[\arccsc(t)]}{dt} = \frac{1}{\abs{t}\sqrt{t^2 1}} }\) 
Trig Integrals
\(\int{\sin(x)~dx} = \cos(x)+C\) 
\(\int{\cos(x)~dx} = \sin(x)+C\)  
\(\int{\tan(x)~dx} = \ln\abs{\cos(x)}+C\) 
\(\int{\cot(x)~dx} = \ln\abs{\sin(x)}+C\)  
\(\int{\sec(x)~dx} = \) \( \ln\abs{\sec(x)+\tan(x)}+C\) 
\(\int{\csc(x)~dx} = \) \( \ln\abs{\csc(x)+\cot(x)}+C\) 
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