A sum of money amounts to ₹35,280 in 2 years and to ₹37,044 in 3 years at compound interest. What is the rate of interest per year?

💡 Solution & Explanation

Between year 2 and year 3, the only change is one year's interest on ₹35,280: ₹37,044 − ₹35,280 = ₹1,764. So the rate = 1,764 ÷ 35,280 × 100 = 5%. Dividing by the larger amount instead gives 4.76%, which is wrong because interest is on the amount at the start of the year.