the simple interest rate is 0.07, or 7%.
Reasoning
To find the simple interest rate, we can use the formula:
I = Prt
where I is the interest earned, P is the principal or initial amount borrowed, r is the interest rate, and t is the time period in years.
We know that a loan of £5500 gains interest of £1540 in 4 years. Therefore, we can plug these values into the formula and solve for the interest rate, r:
1540 = 5500r × 4
Dividing both sides by 22000, we get:
r = 0.07
Therefore, the simple interest rate is 0.07, or 7%.