Question

Joy is taking out a car loan which she will pay back with interest. Which option will require her to pay the lowest amount in interest?

a. Annual Compounding
b. Semi-Annual Compounding
c. Monthly Compounding
d. Daily Compounding

Answer 1

In my view the most suitable option is a. Annual Compounding. Here's the formula, how to count compound interest:
`P [(1 + i)^n - 1]`

P - principal
i - nominal annual in %
n - overall compounding period.