Answer
$\$40$
Work Step by Step
Use the simple interst formula $I=Prt$ where $I$=interest earned, $P$=principal amount invested, $i$ = annual interest rate, ad $t$=time in years.
Here we have $P=\$500$, $i=2\%=0.02$, and $t=4$.
Substitute these values into the formula above to obtain:
$I=500\cdot 0.02 \cdot 4
$I=40
Thus, interest earned is $\$40$.