A student invest $3000 of his student loan and receives 400 dollars in interest over a 4 year period. What is his average yearly interest rate?

Question

I can't figure it out 

Answer 1

I cannot figure out why a student would invest proceeds of a student loan!!  It's unlikely that this would be a profitable scenario, in the real world. Who made up this problem?

 

To work this problem, screwball that it is, anyway, let's just say that the average interest is $100 per year, and that's 1/30th of the principal, so that would be 0.03333 or 3.3% per year--disregarding any compounding that may have occurred.