SOLUTION: Please help me solve this problem: If you earn $3,000 over 10 years on an investment that pays 5% compounded annually, what was the principle amount you started with?

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Question 414304: Please help me solve this problem:
If you earn $3,000 over 10 years on an investment that pays 5% compounded annually, what was the principle amount you started with?

Found 2 solutions by ewatrrr, mananth:
Answer by ewatrrr(24785) About Me  (Show Source):
You can put this solution on YOUR website!


Hi

Earning $3,000 over 10 years on an investment that pays 5% compounded 'annually'

Note: A= P(1+r/n) ^nt  OR in this case: P + I = P(1+r) ^t and I = P[(1+r)^t - 1]

 $3000 = P[(1.05)^10 - 1] 

 $3000/.6289 = P

   $4770.23 = p



CHECKING our Answer***

  $7770.23 = $4770.23(1.05)^10

Answer by mananth(16946) About Me  (Show Source):
You can put this solution on YOUR website!
A=p(1+r/n)^nt
p+3000=p(1+0.05/10)^100
p+3000+1.65p
0.65p=3000
p=3000/0.65
P= $4,675