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Calculate the principal amount invested given simple interest earned, time period, and annual interest rate.

Accounting

ScanSolve AI Answer

Answer

100,000

Step-by-step solution

3 steps

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  1. Identify the given values.

    The interest earned (II) is 20,000.
    The time period (TT) is 2 years.
    The annual simple interest rate (RR) is 10%, which is 0.10 in decimal form.

  2. State the formula for simple interest and rearrange it to find the principal.

    The formula for simple interest is:

    I=P×R×TI = P \times R \times T

    To find the principal amount (PP), we rearrange the formula:

    P=IR×TP = \frac{I}{R \times T}

  3. Substitute the values into the formula and calculate the principal.

    P=20,0000.10×2P = \frac{20,000}{0.10 \times 2} P=20,0000.20P = \frac{20,000}{0.20} P=100,000P = 100,000

    The amount of money invested is 100,000.

    The amount of money invested is:

    100,000100,000
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