If N25,000.00 is kept in a bank at the rate of 2% simple interest, how much will it amount to at the end of 5 years?
- N2,500.00
- N5,000.00
- N12,500.00
-
N27,500.00
- N125,000.00
The correct answer is: D
Explanation
Simple Interest = Principal x Rate x Time
Where: Principal = N25,000, Rate = 2% or 0.02 and Time = 5 years
Plugging in the values:
Simple Interest = N25,000 x 0.02 x 5 Simple Interest = N25,000 x 0.1 Simple Interest = N2,500
To find the total amount at the end of 5 years, we add the simple interest to the principal:
Total Amount = Principal + Simple Interest Total Amount = N25,000 + N2,500 Total Amount = N27,500
Therefore, at the end of 5 years, the total amount would be N27,500.