An amount invested at compound interest grows to Rs. 800 after 3 years and to Rs. 840 after 4 years. What is the annual interest rate?

Explanation

The interest earned in the 4th year is Rs. 840 - Rs. 800 = Rs. 40. Since the amount at the start of the 4th year is Rs. 800, the rate of interest per annum is (40 / 800) × 100 = 5%.