A sum of money invested on compound interest amounts to Rs. 672 in 2 years and to Rs. 714 in 3 years. What is the rate of interest per annum?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 6.25%
if the duration under consideration is 1 Year (unit time), simple interest = compound interest
Amount after 2nd year, A2 = 672
Amount after 3rd year, A3 = 714
Thus rate can be calculated as per simple interest, R = \(\frac{A3-A2}{A2}\) × 100 = \(\frac{714-672}{672}\) × 100 = 6.25%