The $200 in this statement is called a principal amount.
Explanation:
The rate of interest is always calculated by referring to the principal or base amount and in this case we are given the principal amount to be $200 which can help us in finding the earning at 5% rate of interest which can be found out by the formula PxRxT divided by 100 where P = principal amount = 200 , R = rate of interest = 5 and T = time for which the amount is to be calculated. Hence, the $200 in this statement is said to be the principal amount.
