How do you use the formula to solve these problems: 5%, for 8 years and the final value is $3500?

1 Answer
Jul 29, 2017

Answer:

Principal amount #=$.2,500#

Explanation:

Final Value #$.3500#
Number of Years #n=8#
Rate of Interest #r=5% = 0.05#
Principal amount #=p#
Interest amount #=I#
Final amount #p+I#

The formula to calculate Interest is #=pxxnxxr#

#pxxnxxr=I#

Add p to both sides. You get the final amount. Both sides are equal

#p+[pxxnxxr]=I + p#

In our problem #I + p =$3,500#

Now substitute all the known values in the equation.

#p+[pxx8xx0.05]=3500#
#p+0.4p=3500#
#1.4p=3500#
#p=3500/1.4=2500#

Principal amount #=$.2,500#