Principal amount on a loan is the amount borrowed.
The interest is the amount charged on top of the principal by a lender to a borrower for the use of assets.
Formula to calculate principal from interest.
![Calculate Principal from Interest.](https://www.learntocalculate.com/wp-content/uploads/2020/08/principal.png)
Example:
Suppose you were asked to pay $100 more on a loan after a period of 12 months. The interest rate was 5% p.a.. Calculate the money borrowed.
12 months are equivalent to 1 year, therefore;
![Calculate Principal from Interest.](https://www.learntocalculate.com/wp-content/uploads/2020/08/principal-2.png)
Therefore, the principal was $ 2,000.