Amit borrowed a sum of ₹25,000 on simple interest. Bhola borrowed the same amount on compound interest(interest compounded yearly). At the end of 2 years, Bhola had to pay ₹160 more interest than Amit. The rate of interest charged per annum is:

$8 \%$

We know ,

Difference b/w CI and SI for 2 years =  \(\frac{P × R² }{100× 100 }\)

160  = \(\frac{25000 × R² }{100× 100 }\)

1600 = 25 × R² 

R = 8%