Answer: The correct option is (B) 3.
Step-by-step explanation: Given that Lily just paid off a $400 loan. She had to pay $60 in interest at a simple annual interest rate of 5%.
We are to find the number of years for which Lily had this loan.
Let n be the required number of years.
Also, P = $400, S.I. = $60 and r% = 5%.
Therefore, by the formula of simple interest, we have

Thus, the required number of years is 3.
Option (B) is CORRECT.