Find the Principal in Simple Interest
Formula:
P = I / rt
where: P = principal, r = interest rate, I =simple interest, t = time period (in years)
Learn how to find the principal in simple interest with the following examples:
Question 1:
Calculate the principal that will earn $1,575 simple interest in 6 years at 7.5 percent per year.
Solution:
P = I / rt = 2300 / (0.075 * 6) = 1,575 / 0.45 = $3,500
Question 2:
A businessman borrowed an amount for 12 years at a rate of 3% per annum. The simple interest paid was $21,600. What was the amount borrowed?
Solution:
P = I / rt = 21,600 / (0.03 * 12) = 21,600 / 0.36 = $60,000
Thus, the amount borrowed (or principal) was $60,000.
* Next: How to Find Time in Simple Interest
P = I / rt
where: P = principal, r = interest rate, I =simple interest, t = time period (in years)
Learn how to find the principal in simple interest with the following examples:
Question 1:
Calculate the principal that will earn $1,575 simple interest in 6 years at 7.5 percent per year.
Solution:
P = I / rt = 2300 / (0.075 * 6) = 1,575 / 0.45 = $3,500
Question 2:
A businessman borrowed an amount for 12 years at a rate of 3% per annum. The simple interest paid was $21,600. What was the amount borrowed?
Solution:
P = I / rt = 21,600 / (0.03 * 12) = 21,600 / 0.36 = $60,000
Thus, the amount borrowed (or principal) was $60,000.
* Next: How to Find Time in Simple Interest