Answer:
Interest Rate = 3.2%
Explanation:
To find the interest rate of a loan charging $640 simple interest on a principle of $5000 after 4 years, we will follow the steps below;
Write down the formula for finding simple interest
S.I = PRT/100
where
S.I = simple interest
P= principal
R=rate
T=time(in years)
From the question given
S.1=$640
P=$5000
T=4
R=?
We can now proceed to insert our values into the formula and then solve for R
S.I = PRT/100
$640 = $5000×R×4 /100
$640 = $20000R /100
Multiply 100 to both-side of the equation
$640 × 100 = $20000R/100 × 100
$64000 = $20000R
Divide both-side of the equation by $20000
$64000/$20000 = $20000R/$20000
At the right-hand side of the equation $20000 will cancel-out each other leaving us with just R
3.2 = R
Rate = 3.2%