To calculate the simple interest earned on an investment, we use the formula:
Simple Interest = Principal x Rate x Time
Where:
Principal = $1000
Rate = 16% = 0.16 (converted to decimal form)
Time = 20 years
Substituting the given values into the formula, we get:
Simple Interest = $1000 x 0.16 x 20
Simple Interest = $3200
Therefore, the simple interest earned on a $1000 investment at 16% for 20 years is $3200.
Note that this calculation only gives us the interest earned, not the total value of the investment after 20 years. To calculate the total value, we would need to add the simple interest to the initial principal of $1000.