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To solve for the simple interest owed on this loan, we use the simple interest formula:

\[
I = P \times r \times t
\]

where:
- $ P $ is the principal amount (the initial loan),
- $ r $ is the interest rate (expressed as a decimal), and
- $ t $ is the time in years.

In this case:
- $ P = 700 $,
- $ r = 2\% = 0.02 $,
- $ t = 1 $ year.

Now we calculate:

\[
I = 700 \times 0.02 \times 1 = 14
\]

So, the simple interest earned in one year at 2% on a $700 loan is **$14**.

Would you like more details or have any questions about this?

Here are some related questions:
1. How would the interest change if the rate were 3% instead of 2%?
2. What would the interest be for a 2-year loan at the same rate?
3. How can simple interest be compared with compound interest in this scenario?
4. How does the formula adjust if the time period is in months instead of years?
5. What impact does increasing the principal have on the interest earned?

**Tip:** Always ensure the interest rate is in decimal form when using the simple interest formula to avoid errors in calculation.

Find the simple interest owed for the loan. $700 at 2% for 1 year. In one year at 2%, a loan of $700 earns $___ in simple interest.

Learn how to calculate the simple interest on a $700 loan at a 2% interest rate for 1 year. This example uses the simple interest formula to find the amount earned, providing a clear solution for middle school students.

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