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 the correct choice
A) $10079.44  B) $10815.83  C) $12652.61  D) $14232.14  E) $20598.11
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 &amp; 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 ($10815.83)
<result>B</result>
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?