Rajeev invested Rs.3.000 for 2 years at compound interest (compounded annually) in a company which paid him interest of Rs.1,320. What will be the annual rate of interest at which Rajeev invested his money?

20 percent

We know ,

Amount = Principal + Interest

= 3000 + 1320

= 4320

Now,

Amount = Principal × ( 1 + \(\frac{rate }{100}\) )^t

4320 = 3000 × ( 1 + \(\frac{rate }{100}\) )²

\(\frac{4320 }{3000}\) = ( 1 + \(\frac{rate }{100}\) )² 

\(\frac{144 }{100}\) = ( 1 + \(\frac{rate }{100}\) )²

(\(\frac{12 }{10}\))² = ( 1 + \(\frac{rate }{100}\) )²

\(\frac{12 }{10}\) = 1 + \(\frac{rate }{100}\) 

\(\frac{rate }{100}\) = \(\frac{12 }{10}\) - 1

\(\frac{rate }{100}\) = \(\frac{2 }{10}\)

Rate = 20%