Simple interest formula
[tex]A=P(1+rt)[/tex]
where,
A=final amount
P=initial principal balance
r=annual interest rate
t=time (in years)
In this example,
A = $500
r = 7% = 0.07
t = 9 months
Replacing, we get:
[tex]500=P(1+0.07\cdot9)[/tex]
therefore, the principal would be: P = $306.75
[tex]P=\frac{500}{1+0.07\cdot9}=\frac{500}{1.63}=306.75[/tex]
