The formula for the future value V (in dollars) of an investment earning simple interest is V=p+prt, where p (in dollars) is the principal, r is the annual interest rate (in decimal form) and t is the time (in years). a. Solve the formula for p . p= b. An investment earns 6% simple interest. What amount of principal is needed to have $3000 after 5 years? Round your answer to the nearest cent. Amount of principal: $
Mathematics · High School · Tue Nov 03 2020
Answered on
Given:
Future value (A) : $3000
Interest rate ( r ): 6% or 0.06
Term ( t ) = 5 years
Determine the principal amount.
We are given the formula for simple interest, although we can use the alternative formula,
A = P(1 + rt)
Solution:
Substitute the given values to the formula.
$3000 = P ( 1 + (0.06)(5))
$3000 = P ( 1 + 0.3)
$3000 = P ( 1.3 )
Divide both sides by 1.3 in order to get the principal amount.
P =$2307.7
Final answer:
P =$2307.7