Question

Vince takes out a loan of £400. It gathers simple interest as shown in the table

below.
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Work out the annual interest rate as a percentage (%).
Start
After 1 year
After 2 years
After 3 years
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£400
£420
wed
£440
£460
Answer

Answer 1

The annual interest rate is 5%.

Step-by-step explanation:

To calculate the annual interest rate, we need to find the rate that, when applied to the initial loan amount of £400, will result in the final amount of £460 after 3 years.

The formula to calculate simple interest is:

Final Amount = Principal + (Principal x Rate x Time)

Plugging in the given values:

£460 = £400 + (£400 x Rate x 3)

Now, solve for the rate:

£460 - £400 = £400 x Rate x 3

£60 = £1200 x Rate

Rate = £60 / £1200 = 0.05

Convert the rate to a percentage:

Rate as a percentage = 0.05 x 100% = 5%

Answer 2

H this will probably be 420 because