Question

Find the principal which amounts to #5,000 at simple interestin 5 years at 2% per annum

Answer 1

To answer this we have to apply the simple interest formula:

I =P x r x t

Where:

I= interest

P= Principal

R= Interest rate ( in decimal form)

t = time (years)

Replacing with the values given:

Interest= I

Principal = ?

Interest rate = 2/100 =0.02

time= 5 years

I = P x 0.02 x 5

I= 0.1P

Amount= P+I

A = P+0.1P

5,000= P+0.1P

5,000= 1.1P

5,000/1.1 =P

4,545.45 =P