To find the rate of interest earned, we can use the formula for simple interest. Simple interest is calculated using the formula:
Interest (I) = Principal (P) × Rate (R) × Time (T)
In this case, we know the following:
- Principal (P): Rs 100,000
- Amount after 2 years: Rs 144,000
- Time (T): 2 years
First, let’s find the interest earned over the 2 years:
Interest (I) = Amount – Principal = Rs 144,000 – Rs 100,000 = Rs 44,000
Now we have the interest earned and we can plug the values into the formula:
Rs 44,000 = Rs 100,000 × R × 2
Now, simplifying this to find the rate:
R = Rs 44,000 / (Rs 100,000 × 2)
R = Rs 44,000 / Rs 200,000 = 0.22
To express this as a percentage, we multiply by 100:
R = 0.22 × 100 = 22%
Therefore, the rate of interest earned on the principal is 22% per annum.