Question

When given a rate of 8% and a time of 2 years and an interest earned of $108, what is the principal and the new balance?

Answer 1

Principal Value = $93.103

New Balance = $201.103

Explanation:

Given:

Rate=R = 8%

Time =t= 2 years

Money earned = $108

To Find:

Principal interest = ?

New balance = ?

Solution:

The formula for Interest is

A = P(1+rt)

here A = $108, r= R/100 = 8/100 and t= 2

To Find

P=?

Now we have all values putting them in the formula we get

108 = P(
`1+(8)/(100)*2`)

108=P(
`1+(8)/(50)`)

taking LCM and solving

108=P(
`(50+8)/(50)`)

108=P(
`(58)/(50)`)

Multiplying both sides by
`(50)/(58)` we get

`108*(50)/(58)=P((58)/(50)*(50)/(58)`)

we will get

P
`=108*(50)/(58)`

P
`=(5400)/(58)`

We get

P = $93.103

so Principal Value is $93.103

Now

New balance = Principal value + Interest earned

= 93.103 + 108

= $201.103

New Balance = $201.103