



 
Kenneth, $500.00 @ 5% yields
$525.00 @ 2% yields
Hence
or
Thus there is a 2.9% increase over the two time periods or an average of 1.45% per time period. Hence the 2.9% comes from (1 + 0.05) × (1  0.02). I hope this helps, Kenneth wrote back
In the expression $500.00 + 0.05 x $500.00 you need to do the multiplication first. Since 0.05 x $500.00 = $25.00 the expression is
Rather than calculate $500.00 + 0.05 x $500.00 this way I wanted to use the distributive law. I'm going to illustrate with samller numbers.
But this can also be written
In the expression 3 × 2 + 4 × 2 there is a factor of 2 which is common to both terms 3 × 2 and 4 × 2. This allows me to factor out the 2 and write 3 × 2 + 4 × 2 as (3 + 4) × 2. In my earlier expression $500.00 + 0.05 x $500.00 think of the first $500.00 as 1 × %500.00 then
is
and $500.00 is a common factor so
Penny  


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