If the difference between simple interest and compound interest on Rs. 5000 for 2 years is Rs. 72, what is the rate of interest?

Explanation

Let the rate of interest be R%. The difference between compound interest and simple interest for 2 years is given by: 5000 × [(1 + R/100)^2 – 1 – 2R/100] = 72. Simplifying, we get R^2/100 = 72/5000, which leads to R^2 = 1.44 × 100 = 144. Therefore, R = 12%.