Question

Carl deposited $5,142 into a savings account 20 years ago. The account has an interest rate of 3.8% and the balance is currently $10,994.58. How often does the interest compound?
A. daily

B. monthly

C. quarterly

D. annually

Answer 1

Here is the formula you'll need
Total = Principal * (1 + (rate/n))^n*years
I don't know how to solve that for "n" so we'll use trial and error.

If compounded annually, total = 10,841.24
If compounded quarterly, total = 10,955.64
If compounded monthly, total = 10,981.82
If compounded daily, total = 10,994.58
Therefore the answer is "A", daily.

Source:
http://www.1728.org/compint3.htm