To calculate simple interest, you can use the formula:
\[ \text{Simple Interest} = P \times r \times t \]
where:
- \( P \) is the principal amount (the initial amount of money),
- \( r \) is the annual interest rate (in decimal),
- \( t \) is the time the money is invested or borrowed in years.
For your case:
- \( P = 5,000 \) naira,
- \( r = 1.5% = \frac{1.5}{100} = 0.015 \),
- \( t = \frac{4 \text{ months}}{12 \text{ months/year}} = \frac{1}{3} \text{ years} \).
Now, plug these values into the formula:
\[ \text{Simple Interest} = 5,000 \times 0.015 \times \frac{1}{3} \]
Calculating this step-by-step:
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Calculate \( 5,000 \times 0.015 \): \[ 5,000 \times 0.015 = 75 \]
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Then multiply by \( \frac{1}{3} \): \[ 75 \times \frac{1}{3} = 25 \]
Therefore, the simple interest on 5,000 naira for 4 months at an annual interest rate of 1.5% is 25 naira.
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