Find the simple interest on N325 in 5years at 3% per annum.

Analysis

To solve this problem, we need to calculate the Simple Interest using the standard financial formula. We are given the principal amount, the time period, and the annual interest rate.

Concept

The formula for Simple Interest ($I$) is:

Where:

• $P$ (Principal) = The initial amount borrowed or invested = N325
• $R$ (Rate) = The interest rate per annum = 3%
• $T$ (Time) = The duration in years = 5 years

Solution

1. Identify the values: $P = 325$ $R = 3$ $T = 5$

2. Substitute the values into the formula: $$I = \frac{325 \times 3 \times 5}{100}$$

3. Perform the multiplication: First, multiply $3 \times 5 = 15$. Then, multiply $325 \times 15$: $325 \times 10 = 3250$ $325 \times 5 = 1625$ $3250 + 1625 = 4875$

4. Divide by 100: $$I = \frac{4875}{100} = 48.75$$

The simple interest is N48.75K.

Conclusion

Comparing our result to the given options, the correct value is N48.75K.

Exam Tip: When calculating simple interest, always ensure your time ($T$) is in years. If the question gives you time in months, divide the number of months by 12 before plugging it into the formula!