Hi eitijan,

This question is really just about staying organized and doing the calculations one 'step' at a time.

Given the interest payments at 6 months, 12 months and 18 months, the first bit of interest on the $10,000 would be...

6 months: $10,000 + (.02)(10,000) = $10,200
Interest = $200

At the 12 month mark, the interest would be on $10,200 though...

12 months: $10,200 + (.03)(10,200) = $10,506
Interest = $306

At the 18 month mark, the interest would be on $10,506...

18 months: $10,506 + (.04)(10,506) = about $10,926
Interest = about $420

The question asks for the TOTAL interest earned. We can either add up the 3 interest payments OR since we know the final TOTAL, we can subtract $10,000 to determine the interest.

Final Answer: E

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