Final answer:
Tommy's annual interest rate is calculated using the formula for simple interest. After dividing the total interest earned by the product of the principal and the time, we find a rate of 3.8%, which could be rounded to 4% if approximate answers are acceptable.
Step-by-step explanation:
To calculate the annual interest rate that Tommy earned from his principal of $400, we can use the formula for simple interest
Interest = Principal × rate × time
Here, Tommy earned $76 in interest over 5 years, so using the information we have:
$76 = $400 × rate × 5 years
To find the rate, we divide both sides by the principal and time:
Rate = $76 / ($400 × 5)
Rate = $76 / $2000
Rate = 0.038 or 3.8%
Checking the answer choices, none of them match exactly 3.8%, so Tommy's annual interest rate would typically be rounded to the nearest option available which would be 4% (Answer choice A). However, if precise matching is expected, this would not correspond to any option given.