Question

Which statement best describes the term principal

Answer 1

The principal is the starting amount of money either being saved or loaned.

Explanation:

The principal is the starting amount of money for interest formulas. Most common formulas are:

• 
  `A = Pe^(rt)`
• 
  `A= P ( 1+ rt)`
• 
  `A = P(1+(r)/(n))^(rt)`

In each of these equation, P stands for principal. It is the starting amount which is then multiplied by whatever interest is being applied to find the total amount after time t.