Step 1

We start with the compound interest formula:

Where:

• A is the total amount of money (including interest) after n years
• P is the principal ($5000)
• r is the interest rate per year (20 ÷ 100 = 0.2)
• n is the loan duration in year (2 years).

Step 2

With P=5000, r=0.2 and n=2, we can substitute these values into the formula as shown:

Step 3

The total amount that we need to pay back is $6655. Hence, the answer is C.