Jill invests $10000 in an account that pays an annual rate of 3.96%, compounding semi-annually. Approximately how much does she have in her account after two years? Choose one:
A) $ 10079.44  B) $ 10815.83  C) $ 12652.61  D) $ 14232.14  E) $ 20598.11

Rationale: solution : first of all , notice the magic word “ approximately ” — the test - writer is letting us know estimation is perfectly fine . furthermore , the answer choices are nicely spread out , which will facilitate estimating . ok , get ready for some fast & furious estimation . the interest rate 3.96 % is an ugly number , so i ’ m going to approximate that as 4 % . it compounds semiannually , so that means that there ’ s 2 % every six months , and that happens four times in two years . well , 2 % of $ 10000 is $ 200 . if you get $ 200 , or a little more , on four occasions , that ’ s a little more than $ 800 in interest . we expect an answer slightly higher than $ 10800 , so of course ( b ) is just right . notice , i estimated so that everything up until the last sum was single - digit math . single - digit calculations are a good standard for which to strive when you are practicing estimation . by the way , if you find the bank that will do answer ( e ) , double your money in only two years , that ’ s terrific , but it probably is something wildly illegal , a ponzi scheme or worse ! in the real world , that just doesn ’ t happen . on word problems , especially in financial situations , you should always have your antenna up for what ’ s realistic or unrealistic . answer ( b )
Answer: B