00:01
If you have read the text for the previous problem, then you know that this equation tells you what price you should buy a stock at with certain conditions set.
00:07
Now, if you notice, this equation could be modeled as a geometric sequence.
00:11
That is, the first term, a1, is equal to p, and then the common ratio, r.
00:18
Well, if you divide the second term by the first, you'll see that the p's cancel and that r is equal to 1 plus i over 1 plus r.
00:25
That's a different r.
00:26
It might get a little confusing.
00:27
So now let's just talk about what these variables are.
00:31
Well, we know that for this case, we want p equal to $2 .50...
