Answer:
B) The rate of 9% compounded quarterly is better
Explanation:
The effective annual rate at 8.85% compounded monthly is ...
... (1 +0.0885/12)^12 -1 ≈ 9.218%
The effective annual rate at 9% compounded quarterly is ...
... (1 +0.09/4)^4 -1 ≈ 9.308% . . . . . . larger than 9.218%
The higher rate compounded less often is better.
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The rates would be nearly equivalent (within $1 over 2 years) if the rate compounded monthly were about 8.93% instead of 8.85%
