An amount of N550,000.00 was realized when a principal, x was saved at 2% simple interest for 5 years. Find the value of x

Analyze the question: The amount (principal + interest) is N550,000. The rate is 2% simple interest per year for 5 years. We need the principal, x.

Concept: Simple interest is I = PRT/100, and the Amount is A = P + I.

So A = P(1 + RT/100)

Solution:

1. Substitute R = 2 and T = 5: RT/100 = (2 × 5)/100 = 10/100 = 0.1

2. Write the amount in terms of x: A = x(1 + 0.1) = 1.1x

3. Set it equal to 550,000: 1.1x = 550,000

4. Solve for x: x = 550,000 ÷ 1.1 = 500,000

Check: Interest = (500,000 × 2 × 5)/100 = N100,000. Hmm, that gives 500,000 + 100,000 = 600,000, so recheck the interest: 500,000 × 10/100 = N50,000. Then 500,000 + 50,000 = N550,000 ✓.

(The slip above was in the arithmetic: 2 × 5 = 10, and 10% of 500,000 is 50,000, not 100,000.)

Answer: x = N500,000.00, which is option D.

Tip: When the question gives the amount (not just the interest), use A = P(1 + RT/100). The total simple-interest growth here is 10% (2% × 5 years), so just divide the amount by 1.1. You can also test the options quickly: 10% of 500,000 is an easy 50,000, which gives 550,000.