A $2000 loan at 6% simple interest for 1 year. What is the interest earned?

A $2000 loan at 6% simple interest for 1 year. What is the interest earned?

• A. 60
• B. 120
• C. 0
• D. 240

Answer: (B)

Simple interest is found by multiplying the principal by the interest rate and the time. Here, the principal is 2000 dollars, the rate is 6% per year, and the time is 1 year. Convert 6% to a decimal (0.06), then compute: 2000 × 0.06 × 1 = 120. So the interest earned is 120 dollars.

Simple interest is found by multiplying the principal by the interest rate and the time. Here, the principal is 2000 dollars, the rate is 6% per year, and the time is 1 year. Convert 6% to a decimal (0.06), then compute: 2000 × 0.06 × 1 = 120. So the interest earned is 120 dollars.