Question

how to get the principal for simple interest rate

Answer 1

To calculate the principal amount (P) using simple interest, you can use the formula for simple interest:

\[
I = P \times r \times t
\]

Where:
- \( I \) is the interest earned or paid,
- \( P \) is the principal amount (the initial sum of money),
- \( r \) is the annual interest rate (as a decimal),
- \( t \) is the time the money is invested or borrowed for, in years.

If you want to solve for the principal \( P \), you can rearrange the formula:

\[
P = \frac{I}{r \times t}
\]

### Steps to Calculate Principal:

1. **Determine the interest (I)**: Find out how much interest has been earned or paid.
2. **Identify the interest rate (r)**: This should be in decimal form. For example, if the interest rate is 5%, use 0.05.
3. **Determine the time (t)**: This is usually in years.
4. **Substitute the values** into the rearranged formula.

### Example:

Suppose you have earned $200 in interest over 3 years at an annual interest rate of 5%.

1. \( I = 200 \)
2. \( r = 5\% = 0.05 \)
3. \( t = 3 \) years

Now plug these values into the formula:

\[
P = \frac{200}{0.05 \times 3} = \frac{200}{0.15} = 1333.33
\]

So the principal amount is approximately $1,333.33.