Carl is facing very difficult financial times and can only pay the interest on a $30,000 loan he has taken. The bank charges him a quarterly compound rate of 5%. What is the approximate interest he pays annually?  Pick:
A) $1200  B) $2000  C) $2150  D) $6000  E) $12000
Usually, you are given the annual rate of interest and it is mentioned that it is annual rate.   The bank charges him a quarterly compounded ANNUAL rate of 20%.   Here you find per quarter rate as  (20/4)= 
<gadget id="calculator"> (20/4)</gadget>
<output>5</output>
5%   I have actually never seen a question with quarter rate given but since this question did not mentionannual rate of interestand since the options did not make sense with 5% annual rate of interest, it is apparent that the intent was a 5% quarterly rate. So the bank charges 5% every quarter and compounds it in the next quarter. Had it been a simple quarterly rate, we would have just found 4 * 5% of 30,000= $6000 as our answer.   But since, the interest is compounded, it will be a bit more than $6000. Option ($6000) looks correct.
<result>D</result>
Carl is facing very difficult financial times and can only pay the interest on a $30,000 loan he has taken. The bank charges him a quarterly compound rate of 5%. What is the approximate interest he pays annually?