How do you find the principal without time or rate when calculating compounding interest?

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To calculate compounding interest, you at least need to know the interest rate. You also need to know how many times the present day value has been compounded in order to work backwards to the principal. So look at the question for more information from which you can derive these...

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To calculate compounding interest, you at least need to know the interest rate. You also need to know how many times the present day value has been compounded in order to work backwards to the principal. So look at the question for more information from which you can derive these pieces of information.

The simplest form of the equation to calculate compounding interest is A = P( 1 + i )^n, where A is the current amount, P is the principal, i is the rate, and n is the number of times that rate is compounded.

Often, the period of time is in multiples of months (n), with the yearly interest rate (r) being provided. In this case, the rate (i) for the compounding period is i = r/n.

 

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