Laurel borrowed some money from Hardy 42 months ago. The loan principal plus interest at 17% compounded annually is to be repaid today. Laurel and Hardy agree that the total amount due is $31,618. How much did Laurel borrow from Hardy 42 months ago?

A) $10,618.49
B) $13,367.12
C) $18,250.88
D) $23,157.32
E) $49,868.89

The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested or borrowed for, in years. In this case, A = $31,618, r = 17% or 0.17, n = 1 (since the interest is compounded annually), and t = 42 months or 3.5 years. We need to solve for P. Rearranging the formula to solve for P gives us P = A / (1 + r/n)^(nt). Substituting the given values, we get P = $31,618 / (1 + 0.17/1)^(1*3.5) = $31,618 / (1.17)^3.5 ≈ $18,250.88.