Question

Linda deposits $500 into an account that pays simple interest at a rate of 4% per year. How much interest will she be paid in the first 4 years?

Answer 1

Assuming that she deposits $500 and forgets about it, here is what she would get after 4 years:

Year 1 - $500 * 1.04 = $520
Year 2 - $520 * 1.04 = $540.80
Year 3 - $540.80 * 1.04 = $562.432
Year 4 - $562.432 * 1.04 = $584.92928

Aftere four years. Linda would be paid $84.93