Financial Polynomials



Financial Polynomials

Problem 90

Compounded semiannually P dollars is invested at annual interest rate r for 1 year. If the interest is compounded semiannually, then the polynomial represents the value of the investment after 1 year. Rewrite this expression without parentheses. Evaluate the polynomial if p=$200 and r=10%

Data:

P = $200 and r = 10%

P = $5670 and r = 3.5%

First we have to generate the expression without using the parenthesis. By using FOIL method we obtain the parenthesis equation

= P (1 + r/2) ^2

= P (1 + r/2) * P (1 + r/2)

By multiplying both equations we get

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