Final answer:
Marilyn's account is accruing compound interest annually. The evidence is that the amount of interest added to her account increases each year, which differs from the constant interest addition that would characterize simple interest. The increasing increments support the compounding nature.
Step-by-step explanation:
The type of interest being compounded in Marilyn's account is compound interest annually. To determine this, we observe that the amount in her account increases each year by more than the previous year, which suggests that interest is being added to the principal amount and then interest is earned on the new total. This is a characteristic of compound interest, as opposed to simple interest which would only calculate interest on the original principal throughout the entire period.
For example, with simple interest, if Marilyn deposited $600 at 1.5% per year, she would earn $9 every year ($600 × 0.015), so after three years she would have $627 ($600 principal plus $9 for each of the three years). Instead, we see the amount is $627.41 after three years, indicating that the interest earned is also earning interest.
In Marilyn's case, the deposit was $600, and after the first year, it grew to $609. This growth of $9 is exactly 1.5% of $600. In the second year, it grew to $618.14, which is an increase of $9.14. This increment is more than the first year's increment, showing that the interest from the first year has also earned interest. By the third year, the account reaches $627.41, and the increment from the second year is $9.27, which is again higher than the previous increment, further confirming the compound nature of the interest. Because the increase is annual and not more frequent, we can conclude it is compounded annually.