To calculate simple interest, you first need to multiply the original amount by the percentage of the money which is going to be added.
In this situation, 500 x 0.05 is the interest which will be added each year.
Therefore, $25 will be added each year. Since it is over 4 years, it is (25*4).
So the account will have earned $100 of simple interest.
Although the account will contain $600, it will have EARNED $100 of interest since it started with $500 already.
Answer - A $100 of simple interest will be earned.
