The compound interest accrued on a principal during the second and third years amounts to Rs.1200 and Rs.1440 respectively. What is the annual rate of interest?

Explanation

The difference between the compound interest for the third and second years is Rs.1440 - Rs.1200 = Rs.240, which represents the interest earned on Rs.1200 for one year. Therefore, the rate of interest is calculated as (240 / 1200) × 100 = 20% per annum.