Question

If you earn $3500 over 10 years on an investment that pays 5.3% compounded annually what was the principal amount you started with

Answer 1

PRT - Principal, Rate , Time formula to solve this I believe. 

Answer 2

Amount , A= $3500

Time , t= 3 years

rate , r= 5.3% = 0.053

Compounded annually , n= 1

The formula we use here is

`A=P(1+(r)/(n))^(nt)`

Now let's plug the values

`3500=P(1+(0.053)/(1))^(1(10))`

`3500= P(1.053)^(10)`

`3500 = P (1.67603742459)`

Divide both sides by 1.67603742459

We get

P = $2088.258859

It means started with approx $2088.26