Calculate the annual loan payment and create an amortization schedule for a ₦500,000 loan at 12% annual interest over 5 years.

The formula for the annual payment ($A$) for an amortized loan is:

$$A = P \frac{r(1+r)^t}{(1+r)^t - 1}$$

Where:
$P = \text{Principal loan amount} = ₦500,000$
$r = \text{Annual interest rate} = 12\% = 0.12$
$t = \text{Number of years} = 5$

Substitute the values into the formula:

$$A = 500,000 \times \frac{0.12(1+0.12)^5}{(1+0.12)^5 - 1}$$ $$A = 500,000 \times \frac{0.12(1.12)^5}{(1.12)^5 - 1}$$

Calculate $(1.12)^5$:

$$(1.12)^5 \approx 1.7623416832$$

Now substitute this value back:

$$A = 500,000 \times \frac{0.12 \times 1.7623416832}{1.7623416832 - 1}$$ $$A = 500,000 \times \frac{0.211480999984}{0.7623416832}$$ $$A = 500,000 \times 0.277409726$$ $$A \approx ₦138,704.86$$

The annual payment is approximately ₦138,704.86.

The amortization schedule shows how each payment is divided between interest and principal, and the remaining loan balance.

Year	Beginning Balance (₦)	Annual Payment (₦)	Interest Paid (₦)	Principal Paid (₦)	Ending Balance (₦)
1	500,000.00	138,704.86	60,000.00	78,704.86	421,295.14
2	421,295.14	138,704.86	50,555.42	88,149.44	333,145.70
3	333,145.70	138,704.86	39,977.48	98,727.38	234,418.32
4	234,418.32	138,704.86	28,130.20	110,574.66	123,843.66
5	123,843.66	138,704.90*	14,861.24	123,843.66	0.00

*Note: The final payment is adjusted slightly due to rounding to ensure the loan balance is exactly zero.
Interest for Year 5 = $123,843.66 \times 0.12 = 14,861.24$.
Principal Paid for Year 5 = 123,843.66.
Total Payment for Year 5 = $14,861.24 + 123,843.66 = 138,704.90$.

The amortization schedule is as shown in the table above.