An example question asks:
Student Bank has agreed to lend you funds to complete the last year of your degree. The bank will lend you $2,400 today, if you agree to repay a lump sum of $4,000 in 4 years from now. What is the approximate annual rate of interest that Student Bank is charging you?
The solution given in the textbook here says that the answer is 14%. However, I've calculated that $1600 in interest over four years amounts to $400 per year, which is 17% of $2400. I believe the correct answer should be 17%.
Am I wrong? and why?