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Compound interest: $1,000 at 5% compounded annually for 2 years. What is the total?

A $1,100
B $1,102.50
C $1,050
D $1,105

✓ Correct Answer: Option B

A = P(1+r)^t = 1000(1.05)² = 1000(1.1025) = $1,102.50.

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