To calculate simple interest, you can use the formula:
\[ \text{Simple Interest} = P \times r \times t \]
where:
- \( P \) is the principal amount (the initial investment),
- \( r \) is the annual interest rate (expressed as a decimal),
- \( t \) is the time the money is invested for (in years).
In this case:
- \( P = 1000 \)
- \( r = 10% = 0.10 \)
- \( t = \frac{2}{12} \) years (since 2 months is \( \frac{2}{12} \) of a year or \( \frac{1}{6} \) of a year).
Now, plug the values into the formula:
\[ \text{Simple Interest} = 1000 \times 0.10 \times \frac{2}{12} \]
Calculating this step by step:
- First, calculate \( \frac{2}{12} \):
\[ \frac{2}{12} = \frac{1}{6} \approx 0.1667 \]
- Now, substitute this value back into the equation:
\[ \text{Simple Interest} = 1000 \times 0.10 \times 0.1667 \]
- Calculate \( 1000 \times 0.10 = 100 \):
\[ \text{Simple Interest} = 100 \times 0.1667 \approx 16.67 \]
Therefore, the simple interest earned on a $1000 investment at a 10% annual interest rate after 2 months is approximately $16.67.
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