Question

Find the principle amount that will grow to $25,000 if interest is 3.2% compounded monthly for 3 years?

Answer 1

The principal amount is $22.747.95

Explanation:

Given:

Amount = %25000

Time = 3 years

Rate of interest = 3.2%

To Find:

the principal amount = ?

Solution:

The principal amount

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

Where

A is the amount

n is the number of times that interest is compounded per unit t

t is the number of years

r is the rate of interest

On substituting the values

`P = (25000)/((1 + ((3.2)/(100))/(1))^(1(3)))`

`P = (25000)/((1 + (0.032)/(1))^(1(3)))`

`P = (25000)/((1 + 0.032)^3)`

`P = (25000)/((1.032)^3)`

`P = (25000)/(1.099)`

`P =\$22.747.95`