Question

landon opened a savings account with a deposit of $3,786.45. nine years later, the balance in the account is $5,135.29. if the interest rate is 3.4%, how often does the interest compound? (2 points) daily monthly quarterly annually

Answer 1

The frequency of compounding for the savings account to start from $ 3,786.45 and end up with $5,135.29 in 9 years is C. quarterly

How to find the frequency of compounding ?

The total number of times interest on a loan or other fixed-return investment is computed in a calendar year. For instance, interest is computed three times year if the frequency of compounding is three.

On a semi-annual, quarterly, monthly, daily, or even continuous basis, interest may be compounded. Calculations of future worth and current value are both impacted by interest that is compounded more frequently than once annually.

With compounding being done per year, the future value would be:
= 3, 786. 45 x ( 1 + 3. 4 %) ⁹

= $ 5, 115. 84

With compounding being done quarterly:

= 3, 786. 45 x ( 1 + 3. 4 % / 4 ) ³⁶

= $ 5, 135. 29

The interest is therefore being compounded quarterly.

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