How To Find The Principle Amount If Rate Of Interest, Time And Total Amount Is Known?
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A = P(1+rt) if the interest is not compounded.
A = total amount; P = principal amount; r = interest rate for a period; t = number of periods
P = A/(1+rt) (divide both sides by (1+rt))
Example
An amount of $1200 is the balance after 2 years at an interest rate of 10%.
P = $1200/(1+.10*2) = $1200/(1.20) = $1000
_____
If the interest is compounded n times per period,
P = A/(1+r/n)nt
A = total amount; P = principal amount; r = interest rate for a period; t = number of periods
P = A/(1+rt) (divide both sides by (1+rt))
Example
An amount of $1200 is the balance after 2 years at an interest rate of 10%.
P = $1200/(1+.10*2) = $1200/(1.20) = $1000
_____
If the interest is compounded n times per period,
P = A/(1+r/n)nt
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