A principal amount grows to Rs. 10,648 after 3 years and to Rs. 9,680 after 2 years. What is the annual rate of interest?

Explanation

Let the principal be P and the annual interest rate be R%. After 3 years, the amount is P(1 + R/100)^3 = 10,648, and after 2 years, it is P(1 + R/100)^2 = 9,680. Dividing the two equations gives (1 + R/100) = 10,648 / 9,680 = 11 / 10, so R/100 = 1/10, which means the rate of interest R is 10%.