Roman saves $500 each year in an account earning interest at an annual rate of 4% compounded annually. How much interest will the account earn at the end of each of the first 3 years?
First what needs to be done is find out what 4% of $500 is, and add that to $500 to get how much money you would have after the first year. 4% of 500 would be 20, so you'd have $520 after the first year. Now, find 4% of $520, for the second year. 4% of $520 would be 20.8, so add that and get $540.8. Now for the last year, find 4% of $540.8. That would be 21.632. Round 21.632 to the nearest hundredth: 21.63 add that to $540.8: $562.43. Hope this helped!
