Feeling dumb, compound interest headache

[Aphex]

Ok, so the formula itself isn't a problem. I have all the figures I need and the rest is easy to understand. What I'm struggling with appears to be so basic that it isn't explained anywhere

So here is a ripped explanation just quickly:

The formula for annual compound interest is A = P (1 + r/n) ^ nt

Where:

A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for

Why the 1 +

Please god why the 1 +

I assume it's saying to use it once in the formula but why would it need to be there at all?

I'll add, I was awful with all things mathematics at school so my foundation is terrible.

Please help an idiot

[Aphex]

TheExcession said:

Go on I'll try.

It's because it is multiplied by the P, the principal investment amount.

r/n gives the fraction of the interest, (1+r/n) adds the fraction of the interst and keeps the original P too.

If that makes sense.

That does make sense, thank you! If I had a 2 + I would be effectively doubling my initial amount by that logic

[Aphex]

No I wouldn't do that. I suppose my frustration comes in that it uses a number where it would make more sense to me for that to have it's own term rather than using numbers.

Especially when trying to pull it apart an change it to see the outcome when 'its the way it works' is the only explanation there is

[Aphex]

It does help alot thanks for bearing with me there, appreciate the help