Final answer:
The simple interest earned on a deposit of $775 at a rate of 4.24% over four years is $131.92, which corresponds to answer choice (a).
Step-by-step explanation:
In this financial scenario, Ryan makes a deposit of $775 into an account with a simple interest rate of 4.24% for a period of four years. To determine the interest earned, the formula for simple interest, which is Interest = Principal × Rate × Time, is applied.
Breaking down the components of the formula:
- Principal (P) = $775
- Rate (r) = 4.24%, represented as 0.0424 in decimal form
- Time (t) = 4 years
Substituting these values into the formula, the calculation for the simple interest earned by Ryan is as follows:
Interest = $775 × 0.0424 × 4 = $131.92.
Therefore, the amount of simple interest accrued on Ryan's initial deposit is $131.92.
Simple interest calculations are particularly straightforward, as they consider only the initial principal, the interest rate, and the time for which the money is invested. In this case, the interest is determined by multiplying the principal amount by the interest rate and the time period.
It's important to note that simple interest does not take into account compounding, meaning the interest is calculated solely on the initial principal throughout the specified time frame. As a result, the interest earned remains constant over the investment period.
In conclusion, Ryan can anticipate earning $131.92 in simple interest on his $775 deposit over the course of four years, demonstrating a basic application of the simple interest formula in financial calculations.