The difference between compound interest and simple interest on a sum of Rs. 16,000 for two years is 160. Find the per annum rate of interest.

10%

Let the rate of interest = r 

The formula used: (CI - SI) for 2 years = P$\frac{(r^2)}{100^2}$

Here, P = 16000, CI - SI = 160

⇒ 160 = 16000$\frac{(r^2)}{100^2}$

⇒ 160 x 10000 = 16000 r²

⇒ r = 10%