A loan of £5200 gains interest of £2340 in 5 years.
Find the simple interest rate.
= ? % p. a.

We have the formula to get the amount of money after 5 years:

A = Principal x (1 + rate)^year

or

5200 + 2340 = 5200 x (1 + rate)^5

=> (1 + rate)^5 = (5200 + 2340)/5200 = 1.45

=> 1 + rate = 1.077

=> rate = 1.077 - 1 = 0.077 = 7.7%

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