A sum is invested at compound interest payable annually. The interest in two successive years was ₹225 and ₹236.25. Find the rate of interest.

Correct option is C

Given:
Compound interest for 1st year = ₹225
Compound interest for 2nd year = ₹236.25
Interest is compounded annually.
Formula Used:
In compound interest, the interest of the second year includes interest on the first year's interest.
Difference in CI for two successive years = Interest on the 1st year’s interest
Solution:
Let the rate of interest be R%.
Interest on ₹225 = ₹236.25 - ₹225 = ₹11.25
Let the rate be R%.
According to the formula:
​$$225 \times \frac{R}{100} = 11.25\\\ \\\Rightarrow R = \frac{11.25 \times 100}{225} = \frac{1125}{225} = 5$$%​