If 2 and half percent interest per annum is paid on fixed deposit, what will N500 000 amount to in 4 years?
Show workings bit by bit
Step 1: Calculate the interest rate per year:
2.5% = 0.025
Step 2: Calculate the interest earned over 4 years:
Interest earned = 0.025 x 500,000 x 4 = N50,000
Step 3: Calculate the total amount after 4 years:
Total amount = 500,000 + 50,000 = N550,000
This in 2023, most banks now have the math skills to calculate compound
interest! , simple interest is used for short periods of time, like 5 weeks.
amount = 500000(1.025)^4 = 551,906.45
impatient much?
Once is enough, thank you.
Repeated postings will not get faster or better responses.
To calculate the amount that N500,000 will amount to in 4 years with a 2.5% interest rate, we need to use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (N500,000 in this case)
r = the annual interest rate (2.5% or 0.025 as a decimal)
n = the number of times that interest is compounded per year (typically 1 for annual compounding)
t = the number of years
Now, let's calculate step by step:
Step 1: Convert the interest rate to a decimal
Since the interest rate is given as a percentage, we need to convert it to a decimal by dividing it by 100:
r = 2.5% / 100 = 0.025
Step 2: Substitute the values into the formula
A = 500,000(1 + 0.025/1)^(1*4)
Step 3: Simplify within parentheses
A = 500,000(1 + 0.025)^(4)
Step 4: Calculate the exponent
A = 500,000(1.025)^(4)
Step 5: Raise the base to the exponent
A = 500,000 * 1.103812890625
Step 6: Calculate the final amount
A = 551,906.45
Therefore, N500,000 will amount to N551,906.45 in 4 years with a 2.5% annual interest rate.