Math help needed: What is the principal? #2

Mathematics
Tutor: None Selected Time limit: 1 Day

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?
A.
B.
C.
D.
Nov 9th, 2015

Thank you for the opportunity to help you with your question!

We just need to use the following expression:

F=P(1 + r*t)

So first, we solve for P by dividing by (1+ r*t) from both sides like this.

F /(1+r*t) = P*(1+r*t)/(1+r*t)   ------------->  F/(1+r*t) = P ----------------->   P = F/(1+r*t)

So we know: F = $3,720  ;   t = 3 years    ;    r = 8% / year = 8/100 = 0.08 (in decimal form)

Then we enter 3,720 in place of I, 3 in place of t, and 0.08 in place of r into the equation.

P = 3,720/(1+0.08*3) = 3,720/(1+0.24) =3,720/1.24 =  3000

Final answer:  P = $ 3000   (so it's option C).

Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 9th, 2015

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