What is the meaning of m in the formula \( \mathrm{A}=\mathrm{P}\left(1+\frac{r}{\mathrm{~m}}\right)^{n} \), and why is r divided by m ? What is the meaning of m in the formula? A. The principal B. The number of compounding periods per year C. The number of months D. The interest rate

In the formula \( \mathrm{A}=\mathrm{P}\left(1+\frac{r}{\mathrm{~m}}\right)^{n} \), the "m" represents the number of compounding periods per year, which is crucial for determining how frequently interest is calculated on the principal. For instance, if interest is compounded monthly, \( m \) would be 12, while for quarterly compounding, \( m \) would be 4. The interest rate \( r \) is divided by \( m \) because this adjustment allows the formula to reflect the interest applied in each compounding period. By dividing the annual interest rate by the number of compounding periods, you effectively distribute the annual rate across the periods, ensuring that each specific compounding interval receives the appropriate amount of interest. This keeps calculations accurate when evaluating how much interest accumulates over time.