Final answer:
The principal balance, after earning $240 in interest at 4.5% over 3 years, is approximately $1777.78.
Step-by-step explanation:
In order to calculate the principal balance, we need to use the formula for simple interest: Principal x Rate x Time = Interest. We know that the interest earned is $240 and the interest rate is 4.5%. The time is 3 years. Using this information, we can rearrange the formula to solve for the principal balance:
Principal = Interest / (Rate x Time)
Substituting in the values we have, we can calculate:
Principal = $240 / (0.045 x 3) = $240 / 0.135 = $1777.78
Therefore, the principal balance is approximately $1777.78.