The interest on a certain sum lent at compound interest, the interest being compounded annually, in the 2nd year is Rs.1200. The interest on it in the 3rd year is Rs 1440. Find the rate of interest per annum.
Interest of 2nd year = 1200
Interest of 3rd year = 1440
Difference = 240
In compound interest, interest in next year is calculated on previous year
So, = 240 / 1200 x 100 = 20 %
Increase in next year interest is what percent of the interest of previous year is = to the rate of interest