Question

Pierce currently has $10,000. What was the value of his money five years ago if he has earned 5 percent interest each year?







A.
$7,462.15
B.
$7,835.26
C.
$8,548.04

Answer 1

judging by the numbers it's most likely compound interest rather than simple interest

compound interest formula

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

where A is the final amount (10,000)
P is the principal (which you'll solve for)
r is the interest rate as a decimal (5% interest so r = 0.05)
n is the number of times compounded per year. he earns interest annually, so it only compounds once per year, so n = 1
t = 5 since it's over 5 years

plug in the appropriate quantities and solve for P