Final answer:
Lily took 3 years to pay off the $400 loan. The calculation uses the simple interest formula, with the known values of $60 interest and a 5% interest rate.
Step-by-step explanation:
To determine how many years it took Lily to pay off a $400 loan with an annual simple interest rate of 5% that resulted in a total interest of $60, we can use the formula for simple interest: Interest = Principal × Rate × Time. In this case, we know the Interest ($60), the Principal ($400), and the Rate (5%), and we need to solve for the Time (years).
The formula rearranges to: Time = Interest / (Principal × Rate). Plugging in the values: Time = $60 / ($400 × 0.05). Calculating this gives us: Time = $60 / $20, so Time = 3 years. Therefore, it took Lily 3 years to pay off the loan.