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Financial Polynomials

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Financial Polynomials

MAT221: Introduction to Algebra

June 14, 2013

Compounded semiannually. P dollars is invested at annual interest rate r for 1 year. If the interest is compounded semiannually, then the polynomial P(1+r/2)2 represents the value of the investment after 1 year. Rewrite this expression without parentheses.

|P(1+r/2)2 |Squaring the expression- this is the same as multiplying the expression by itself 2 times.| | | | | |Simplify the expression using the FOIL method | |P(1+r/2)(1+r/2) | | | |Combined like terms r + r = 2r or r | |P(r2/4+r/2+r/2+1) |2 2 2 | | |Distribute P across the trinomial | |P(r2/4+r+1) | | | |Place all variables in descending order | |Pr2/4+Pr+P | |

Now we are to try out our polynomial formula with the given sets of numerical information.

|P = $200 and r = 10% |Interest rate as a decimal number r =.10 | |Pr2/4+Pr+P |The expanded formula...