The difference between the compound interest and simple interest on Rs. 15,000 for a period of 2 years is Rs. 96. What is the annual rate of interest?

Explanation

Let the rate of interest be R% per annum. The difference between compound interest (CI) and simple interest (SI) for 2 years is given by: CI - SI = 15000 * [(1 + R/100)^2 - 1 - 2R/100]. This difference equals Rs. 96. Simplifying, we get 15000 * [ (100 + R)^2 - 10000 - 200R ] / 10000 = 96, which leads to R^2 = 64. Therefore, R = 8%. Hence, the rate of interest is 8% per annum.