How To Find PRINCIPAL In Simple Interest

To find principal in simple interest, you need to know the formula, apply the formula and then simplify to your answer.

In this lesson, you will learn the formula and the step-by-step method for finding principal in simple interest.

BONUS: A link to practice questions on simple interest is included at the end of this lesson.

Formula for finding principal in simple interest

From the general formula for finding simple interest, which is

I= \frac{PRT}{100}

Change the subject of the formula from (I) to (P) therefore making the principal (P) stand alone to give the formula for finding principal in simple interest.

P= \frac{100I}{RT}

Question on finding principal in simple interest

Let’s take an example:

Question:

What is the principal amount that will yield the interest of #18 in 6months at 8% per annum?

STEP 1.

List the values given In the question

I = #18

P = ??

R = 8%

T = 6 months, which is \dfrac{1}{2} year

NOTE: Time (T) is always calculated in year.

STEP 2.

Transfer the values into the formula

P= \frac{100×18}{8×\frac{1}{2}}

STEP 3.

Simplify to your answer

• Use the steps for multiplication of fractions to clear the fraction.

P= \frac{100×18}{4}

• Multiply the numerators

P= \frac{1800}{4}

• Divide by the denominator

\frac{1800}{4} = 450

FINAL ANSWER:

The principal amount that will yield the interest of #18 in 6months at 8% per annum is

= #450

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Click the button to practice questions on simple interest.