Question

Find the simple interest paid to the nearest cent for each principal, interest rate, and time. $1,000; 18%; 2 years.

A. $360.00
B. $380.00
C. $400.00
D. $420.00

Answer 1

The simple interest paid on a principal of $1,000 at an 18% interest rate over 2 years is calculated using the formula I = P × r × t, yielding $360.00, which is option A.

Step-by-step explanation:

To find the simple interest paid to the nearest cent for a principal of $1,000 at an interest rate of 18% over 2 years, we use the simple interest formula: I = P × r × t

Where:

• I is the interest
• P is the principal amount ($1,000)
• r is the annual interest rate (18% or 0.18)
• t is the time in years (2 years)

By substituting the numbers into the formula, we get:

I = $1,000 × 0.18 × 2

I = $360.00

Therefore, the simple interest paid is $360.00, which corresponds to option A.