- #1

- 717

- 131

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

My question is in regards to the 1 here. I think I have a general idea of what it's for, but I can't really put it into correct words.

What it seems to be doing, is keeping the new compounded value above ##P##. Where if the 1 wasn't there, we would be getting a value less than ##P##. But this seems wishy washy and I'd like to put it into more definitive terms so that I can understand it better. Can anyone help me out with this?