Jameel invested Rs. 17,400 for a period of two years. If the compound interest earned at the end of this period is Rs. 1,783.50, what is the annual compound interest rate?

Explanation

Let the annual interest rate be R%. The compound amount after 2 years is given by: 17400 × (1 + R/100)^2 = 17400 + 1783.50. Simplifying, (1 + R/100)^2 = (17400 + 1783.50) / 17400 = 19183.50 / 17400 ≈ 1.1025. Taking the square root, 1 + R/100 = √1.1025 = 1.05. Therefore, R/100 = 0.05, which means R = 5%. Hence, the rate of compound interest is 5% per annum.