Question 54800
<br>You did not state whether interest was simple or compounded.  The first response ignored the fact that the interest was over 4 years; the second response assumed the interest was compound interest.<br>
Because of the numbers, I suspect the intention might have been for the interest to be simple interest.  If that is the case, the numbers work out easily, and we get "nice" answers.<br>
For simple interest, the amount of interest is simply the beginning principal, P, multiplied by the interest rate, r, and multiplied by the number of years, t (for "time"):<br>
{{{I = Prt}}}<br>
Plugging in the numbers from your problem...
{{{400 = 5000(r)(4)}}}
{{{400 = 20000r}}}
{{{r = 400/20000 = 4/200 = 2/100}}}<br>
The interest rate (assuming simple interest) is 2%