Yes of course. Subtracting 1 is our way to figure out the compounded rate of return earned. Let me give you a simple example. Suppose you have $1 and you invest it for 1 year at interest rate r. After one year you would have $(1+r). If somebody asks you “what rate of return did you earn did you earn over the year”, you’d say r, which is basically $(1+r) - $1. Essentially you can think of subtracting $1 as our way of subtracting the initial “investment” (of $1) to figure out what rate of return we earned over the investment period. The same logic applies over multi-period investing. Good question, hope this helped. Feel free to reach out if you have more questions.

@@professorikram Very clear explanation! Thank you very much for breaking it down for me :) You're an excellent teacher.