Question

The formula for the future value V (in dollars) of an investment earning simple interest is V=p+prt, where p (in dollars) is the principal, r is the annual interest rate (in decimal form) and t is the time (in years).
a. Solve the formula for p
b. An investment earns 6% simple interest. What amount of principal is needed to have $3000 after 5 years? Round your answer to the nearest cent

Answer 1

a)

V=p+prt

now we solve for P

V=P (1+rt)

Divide both sides by (1+rt)

P=V÷(1+rt)...answer

b)

P=V÷(1+rt)

P=3,000÷(1+0.06×5)

P=2,307.69