Calculate the rate of interest.

The amount at compound interest which is calculated yearly on a certain sum of money is ₹ 1250 in one year and ₹ 1375 after two years. Calculate the rate of interest.

Solution:

It is given that
Amount after one year = ₹ 1250
Amount after two years = ₹ 1375
Here the difference = 1375 – 1250 = ₹ 125
So ₹ 125 is the interest on ₹ 1250 for 1 year
We know that
Rate of interest = (SI × 100)/ (P × t)
Substituting the values
= (125 × 100)/ (1250 × 1)
= 10%

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