A sum of money amounts to ₹3,630 in 2 years and to ₹3,993 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 ₹3,630: ₹3,993 − ₹3,630 = ₹363. So the rate = 363 ÷ 3,630 × 100 = 10%. Dividing by the larger amount instead gives 9.09%, which is wrong because interest is on the amount at the start of the year.