Using compound interest, it is found that he must invest his money at a rate of 8.78% a year.
<h3>What is compound interest?</h3>The amount of money earned, in compound interest, after t years, is given by:
In which:
- A(t) is the amount of money after t years.
- P is the principal(the initial sum of money).
- r is the interest rate(as a decimal value).
- n is the number of times that interest is compounded per year.
In this problem, the parameters are as follows:
t = 3, A(t) = 60000, P = 46150.3, n = 12.
Hence:
r = 12 x 0.00731451758
r = 0.0878.
He must invest his money at a rate of 8.78% a year.
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