What happens, if we increase the compounding frequency to a very large value such that the interest get compounded continuously, that is the time period between two compounding is near zero?
We calculate the amount $(A)$ using
$A = P \times e^{\frac{RN}{100}}$
You will understand the derivation of this formula in details when you learn the concept of Limits as a part of Calculus.
where,
$P = the\ principal\ amount$,
$R = the\ annual\ rate\ of\ interest\ in\ \%$,
$N = the\ total\ time\ period\ in\ years$,
$A = the\ total\ amount\ after\ N\ years$
We will cover the term $e$ is a little more details below.
$e$ is called the Euler number. $e$ is used as the base of natural logarithms, and we will learn about this number in greater details when we study logarithm.
$e$ is an number, which is often approximated to a value of $2.71828$ or $2.72$.