Chapter 4.10, Problem 6A

When an initial amount of P dollars is invested at $r\%$

annual interest compounded m times per year, the value of the account $\left(A\right)$

after t years is given by the equation

$A=P{\left(1+\frac{r}{m}\right)}^{mt}$

Describe the significance of $\left(1+\frac{r}{m}\right)$

in the formula. (Think about Question 4.)