Question

Arthur paid a two-year debt with ₱16,907.40. The interest was at 6% compounded monthly. What was the principal?

Answer 1

Compound interest formula:

A = P(1 + r/n)^nt

Where

A= amount

P = principal

r = interest rate

n = amount of times interest is is compounded per time period

t = time period

So:

P = A/[(1 + r/n)^nt]

P = 16,907.40/[(1 + 0.06/12)^2*12]

P = ₱15,000.00