If the principal amount is $1000, the rate of interest is 2% per year, and the time period is 3 years, what is the simple interest?

The foundational concept here is calculating simple interest. The formula for simple interest (SI) is P * R * T / 100, where P is the principal amount, R is the annual interest rate, and T is the time period in years.

• Correct Option C ($60): Applying the formula, SI = ($1000 * 2 * 3) / 100 = $6000 / 100 = $60. This is the accurate calculation.
• Distractor A ($20): This would be the interest for only one year ($1000 * 2% * 1).
• Distractor B ($30): This is incorrect, possibly from using a 1% rate or half the time.
• Distractor D ($120): This would imply a 4% rate or double the time period.