At a bank offering 2% annual interest, what is the simple interest on $1,000 after one year?

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Multiple Choice

At a bank offering 2% annual interest, what is the simple interest on $1,000 after one year?

Explanation:
Simple interest is found by multiplying the principal by the interest rate and the time. Here, P = $1,000, the annual rate r = 2% = 0.02, and time t = 1 year. So I = 1,000 × 0.02 × 1 = 20. The interest earned after one year is $20. The other amounts would require different rates: $2 would come from 0.2%, $40 from 4%, and $10 from 1% per year.

Simple interest is found by multiplying the principal by the interest rate and the time. Here, P = $1,000, the annual rate r = 2% = 0.02, and time t = 1 year. So I = 1,000 × 0.02 × 1 = 20. The interest earned after one year is $20. The other amounts would require different rates: $2 would come from 0.2%, $40 from 4%, and $10 from 1% per year.

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