How do I convert P(1 + r)3 and P( 1 + r)4, etc. to the expanded form?
I get confused by the factored version P(1 + r)n. This does not help me to understand.
For example, P(1 + r)2 equals (P + rP) + r(P + rP). Show how this occurs with three and four years.
To start, P(1 + r)^n means what $P deposited today will be worth in n years at annual rate r%.
Originally Posted by jhonydeep3305
EXAMPLE: if $1000 is deposited today, rate is 9%, what will it accumulate to over 3 years?
1000(1 + .09)^3 = 1295.03
The calculation is 1000 * 1.09 * 1.09 * 1.09 which results in 1295.03
> For example, P(1 + r)^2 equals (P + rP) + r(P + rP). Show how this occurs with three and four years.
I also don't understand what you're getting at here; seems irrelevant....
(1 + r)^2 = (1 + r) * (1 + r) = r^2 + 2r + 1; so P(r^2 + 2r + 1)