We can calculate the interest as the difference between the future and the present value of the investment:
[tex]I=FV-PV[/tex]The present value is $4780.
The annual interest rate is r=1.25/100=0.0125.
The number of years is 8, so n=8.
We can calculate the future value as:
[tex]\begin{gathered} FV=PV(1+r)^n \\ FV=4780\cdot(1+0.0125)^8 \\ FV=4780\cdot1.0125^8 \\ FV\approx4780\cdot1.1045 \\ FV\approx5279.44 \end{gathered}[/tex]Then, we can calculate the interest as:
[tex]I=FV-PV=5279.44-4780=499.44[/tex]Answer: D. $499.44
