Answer
$6\frac{1}{4}\%$ compounded annually
Work Step by Step
1. For $6\%$ compounded quarterly for one year, we have $A_1=P(1+\frac{0.06}{4})^4\approx1.0614P$
2.For $6\frac{1}{4}\%$ compounded annually for one year, we have $A_2=P(1+\frac{0.0625}{1})=1.0625P$
3. Thus $6\frac{1}{4}\%$ compounded annually is better.