The rate per annum needs to be reduced to the rate per month for the purposes of calculating compound interest. 12%/12=1% per month. For example, after the first month, the interest on 5000 is 1% of 5000=5000/100=50. So at the start of the second month the amount now subject to interest is 5050, and 1% of this is 5050/100=50.50, making the amount 5050+50.50=5100.50, and so on. The amount after 2 months is 5000(1.01²)=5100.50. After 20 months, this comes to 5000(1.01)²⁰=6100.95 approx.