A=P (1+r) ^t what does the 1 represent

it doesn't represent anything

Step-by-step explanation:

here is an example, Consider that your grandmother is a firm believer in saving money and refuses to give gift cards or cash at holidays. Instead, she gives all of the grandchildren $500 invested in five-year CDs (Certificates of Deposit) with compound interest figured twice a year and a 2% interest rate. Set aside the delayed gratification for a moment - - The question is, how much money will the CD be worth in 5 years? That is where compound interest kicks in.

Filling in the compound interest formula of A=P (1+r/n) ^nt, your holiday gift looks like this: A = 500 (1+.022) ^25. Following the order of operations, we calculate the amount in the parenthesis first to get A = 500 (1.01) ^25. From there, we input the exponents to get A = 500 (1.10). Now in our final calculation, the final value is A = $550. At the end of 5 years, your CD will be worth $550.