3) is referring to an infinite geometric series where IrI < 1
Let Sn = 40 + 40r + 40r^2 + 40r^3........+40r^n = 40(1 + r + r^2 +........+ r^n)
Then Sn/40 = (1 + r + r^2 + ..... + r^n)
And, r Sn/40 = (r + r^2 + r^3 +....+ r^(n+1))
Sn/40 - r Sn/40 = (1 - r^(n +1))
(1 - r)Sn = 40(1 - r^(n + 1))
Sn = 40(1 - r^(n + 1))/(1 - r)
Try it for the limit as n approaches infinity
Sn = 40/(1 - r) Limit (1 - r^(n+1))
Sn = 40/(1 - r) Limit (1) - Limit (0)
Sn = 40/(1 - r)
Sn = 40/(1 - 70/100) = 40/(1 - 7/10) = 40/(3/10) = 40*10/3 = 400/3 ft
Neat huh?
Let Sn = 40 + 40r + 40r^2 + 40r^3........+40r^n = 40(1 + r + r^2 +........+ r^n)
Then Sn/40 = (1 + r + r^2 + ..... + r^n)
And, r Sn/40 = (r + r^2 + r^3 +....+ r^(n+1))
Sn/40 - r Sn/40 = (1 - r^(n +1))
(1 - r)Sn = 40(1 - r^(n + 1))
Sn = 40(1 - r^(n + 1))/(1 - r)
Try it for the limit as n approaches infinity
Sn = 40/(1 - r) Limit (1 - r^(n+1))
Sn = 40/(1 - r) Limit (1) - Limit (0)
Sn = 40/(1 - r)
Sn = 40/(1 - 70/100) = 40/(1 - 7/10) = 40/(3/10) = 40*10/3 = 400/3 ft
Neat huh?