Question

A= P(1+rt) is used to find the principal amount p deposited, earning r% interest, for t years. Use this to find what principal amount P David invested at a 3% rate for 20yr if A=$8,000

Answer 1

We have been given the formula

$A= P(1+rt)$

Now, we have been given that

$r=0.03, t=20,A=\ 8,000$

On substituting these values in the given formula, we get

$8000=P(1+0.03\cdot 20)\\ \\ 8000=P(1+0.60)\\ \\ 8000= 1.60P\\ \\ P=\frac{8000}{1.60}\\ \\ P=\ 5000$

David will invest a principle amount of $5000