A sum of money amounts to ₹12,100 in 2 years and to ₹13,310 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 ₹12,100: ₹13,310 − ₹12,100 = ₹1,210. So the rate = 1,210 ÷ 12,100 × 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.