Question

A loan is paid off in 30 years with a total of $99,000. It had a 3% interest rate that compounded monthly. What was the principal?

Answer 1

Answer:

The principle will be "40295.63". A further explanation is given below.

Step-by-step explanation:

The given values are:

Total amount,

A = 99,000

Rate of interest,

R = 3%

Time period,

T = 30 years

  = 360 months

As we know,

⇒ $A=P(1+\frac{{\frac{R}{12} }}{100} )^T$

On substituting the values, we get

⇒ $99000=P(1+\frac{\frac{3}{12}}{100})^{360}$

⇒ $99000=P(1+\frac{\frac{1}{4} }{100}) ^{360}$

⇒       $P=\frac{99000}{(1.0025)^{360}}$

⇒       $P=40295.63$