What is the compound interest on 5000naira for two years at 5.5percent per annum

Answer 1

To calculate the compound interest, we will use the formula:

A = P(1 + r/n)^(nt)

Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (5000 naira in this case)
r = the annual interest rate (5.5% in this case, or 0.055 as a decimal)
n = the number of times that interest is compounded per year (assuming it is compounded annually, n = 1)
t = the number of years the money is invested for (2 years in this case)

Plugging the values into the formula:

A = 5000(1 + 0.055/1)^(1*2)
A = 5000(1 + 0.055)^2
A = 5000(1.055)^2
A = 5000(1.1123025)
A = 5561.51

To find the compound interest, subtract the principal amount from the future value:

Compound interest = 5561.51 - 5000
Compound interest = 561.51 naira

Therefore, the compound interest on 5000 naira for two years at an interest rate of 5.5% per annum is 561.51 naira.