Problema Solution
If the accumulated amount is $3,720 at the end of 3 years and the simple rate of interest is 8%/year, what is the principal?
Answer provided by our tutors
Simple Interest
I = P*r*t
Accumulated amount
A = P + I = P + P*r*t = P(1 + rt)
A = P(1 + rt)
where
P = ? is the principal
r = 0.08 or 8% is the annual interest rate
t = 3 years is the time in years
A = %3,720 is the accumulated amount
A = P(1 + rt)
P = A/(1 + rt)
P = 3720/(1 + 0.08*3)
P = $3,000
the principal is $3,000.