What will deposit grow to if I invest at 12% compounded quarterly?

What you did will work but you need to drop the percent sign - changing 3% = .03 so it is 20,000 x .03. It will give you the interest earned for the first quarter, which you would add to the $20,000 and that new total would be used in the second quarter calculation. I did it in Excel and came up with answer B: $28,515.20, which makes sense as you'd expect the money to double in 6 years, so it should be slightly less than 1/2 in 3 years.