A client invested $20,000 at 12% for 5 years. At the end of the 5 years, the investment had earned $12,000 in interest. What is the principal in this scenario?

To determine the principal in this scenario, we can follow these steps:

1. Identify the given information:

   • Total investment amount: $20,000
   • Annual interest rate: 12%
   • Investment duration: 5 years
   • Total interest earned: $12,000

2. Understand the relationship between principal, interest rate, time, and interest earned: The formula for simple interest is: $\text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time}$

3. Plug in the known values into the formula: $12,000 = \text{Principal} \times 0.12 \times 5$

4. Solve for the principal: $12,000 = \text{Principal} \times 0.6$ $\text{Principal} = \frac{12,000}{0.6}$ $\text{Principal} = 20,000$

5. Verify the result: The calculated principal is $20,000, which matches the total investment amount given in the problem.

Therefore, the principal in this scenario is $20,000.