Hi All,

The formula for Compound Interest is...

(Principal)(1 + R)^T where R is the interest rate (as a decimal) and T is the length of time (almost always in years).

Although it's relatively rare, the GMAT might ask you to deal with interest that is calculated MORE OFTEN than once a year. When that occurs, you have to make some adjustments to the above formula.

For example, if interest in calculated TWICE a year, then T is DOUBLED, but R is HALVED.

In that same way, if interest is calculated THREE TIMES a year, then T is TRIPLED, but R is DIVIDED BY 3.

Etc.

In this question, calculating interest SEMI-ANNUALLY means "twice a year", so the variables become T=2 and R=10; you can then calculate the answer.

GMAT assassins aren't born, they're made,

Rich

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