How much principal must be invested to earn $30 in six years at an interest rate of 5%

Question

asked Mar 1, 2024 193k views

1 Answer

Janhartmann · Answer 1 · 2024-03-05T13:15:53+0000

To earn $30 in six years at a 5% interest rate, $100 must be invested as the principal.

To calculate how much principal must be invested to earn $30 in six years at an interest rate of 5%, we can use the formula for simple interest:

Interest = Principal × rate × time

To find the principal (P), we rearrange the formula to solve for P:

P = Interest / (rate × time)

Let's plug in the values:

P = $30 / (0.05 × 6)

P = $30 / 0.3

P = $100

Therefore, the amount of principal that needs to be invested is $100.