Answer:
Step-by-step explanation:
The initial amount invested is P0
Say it is compounded periodically either quarterly or monthly or semi annually with interest r%
If for a period interest is r%
Then after first period principal = principal+simple interest
=[tex]P_{0}+\frac{P_{0}r }{n}[/tex]
where n is the no of times in a year it is compounded. n = 4 if quarterly, 12 if annually, etc
At the end of II period we have
Principal =[tex]P_{0}+\frac{P_{0}r }{n}[/tex]
So for interest again the process is repeated
Thus we repeat this nt times which result in power with nt
Hence the formula
