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johnroba2
Jan 31, 2012, 07:26 AM
I need to rearrange the formula shown below

M = P*(1 IR)to the power N

I need it expressed in terms of IR

Thank you for your help

John Roberts

ebaines
Jan 31, 2012, 07:33 AM
I assume you mean this:


M=P(1+IR)^N


You can divide through by P:


\frac M P = (1 + IR)^N


Then take the nth root of both sides:


(\frac M P )^{(1/N)} = 1 + IR


Then subtract 1 from both sides:


(\frac M P )^{(1/N)} -1 = IR

johnroba2
Jan 31, 2012, 08:40 AM
Wow!Thanks very much for your help.

However Ive realised that the orinal equation was wrong

It should have been

M = P*(1+IR)+ (P*(1+IR))to the power N

to be expressed in terms of IR

Thanks again for your help

ebaines
Jan 31, 2012, 08:54 AM
M = P(1+IR) + (P(1+IR))^n


If you replace P(1+IR) with a, you have:


M = a + a^n


Unfortunately there is no closed form solution to express a in terms of M and n. If n = 2 you can use the quadratic equation to solve for a. But other than that case - you're limited to using numerical techniques to estimate a. Once you have that estimate then IR=(a/P)-1