Michelle deposited a certain sum of money in a savings account on July 1st, 2007. She earns an 10% interest compounded semiannually. The sum of money in the account on December 31st, 2009 is approximately what percent of the initial deposit? Choices: A) 127 % B) 120 % C) 121 % D) 135 % E) 140 %

Rationale: "since michelle earns 10 % interest compounded semiannually , then she earns 5 % interest every 6 months . now , the simple interest earned in 5 periods ( 30 months = 5 * 6 months ) would be 5 % * 5 = 25 % . but , since the interest is compounded every 6 months , then there would be interest earned on interest ( very small amount ) thus the actual interest earned would be a little bit more than 25 % , only answer choice a fits . answer : a"
Answer: A