On a certain day, Tim invested $500 at 10 percent annual interest, compounded annually, and Lana invested 900 at 5 percent annual interest, compounded annually.The total amount of interest earned by Tim’s investment in the first 2 years was how much greater than the total amount of interest earned by Lana’s investment in the first 2 years?	Choose the correct choice from the following answers:
A) $ 5 B) $ 12.75 C) $ 51.75 D) $ 100.75 E) $ 105

Rationale: "compounded annually means that the interest is applied once per year . one can have 10 % annual interest compounded monthly - in this case 10 % / 12 would be applied each month , or 10 % annual interest compounded daily etc . with respect to the problem at hand , at the end of two years , tim would have 500 ( 1.10 ) ^ 2 = 500 ( 1.21 ) = 605 and lana would have 900 ( 1.05 ) ^ 2 = 900 ( 1.1025 ) = 992.25 thus , tim earned 105 dollars , while lana earned 92.25 dollars the difference is $ 12.75 and the answer is b ."
Answer: B