The rate of compounding on the investment is 20%.
What is the rate of compounding?
When an amount compounds annually, it means that both the amount invested and the interest accrued increases in value once a year.
The formula that can be used to determine the rate of compounding is: (FV / PV)^(1 /n)
Where:
- FV = future value = 125,000 + 91,000 = 216,000
- PV = present value = 125000
- n = number of years - 3
(216,000 / 125000)^ (1 / 3) - 1 = 20%
To learn more about future value, please check: https://brainly.com/question/18760477
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