4. principal = \\$125\nrate = 4\\%\ntime = 2 years\nsimple interest = \\$10\ncompound interest =

Explanation:

Step1: Identify the compound interest formula

$$A = P(1 + r)^t$$

Step2: Substitute the given values into the formula

$$A = 125(1 + 0.04)^2$$

Step3: Calculate the total amount after two years

$$A = 125(1.04)^2 = 125(1.0816) = 135.2$$

Step4: Subtract the principal to find the interest

$$CI = A - P = 135.2 - 125$$

Answer:

compound interest = $10.20