If Rs. 500 amounts to Rs. 583.20 in two years compounded annually, find the rate of interest per annum.

     

          Principal = Rs. 500; Amount = Rs. 583.20; Time = 2 years.                                                                            
           Let the rate be R% per annum..
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           Then,      [ 500 (1+(R/100)² ] = 583.20 or [ 1+ (R/100)]^{2 =} 5832/5000 = 11664/10000

                            [ 1+ (R/100)]² = (108/100)² or 1 + (R/100) = 108/100 or R = 8