Correct Answer: A
Explanation:
I = The interest during the end of the second year to the end of the third year = 714 - 672 = 42
As the rate remains constant, so the rate of interest during the second and the third year.
P = the amount at the end of the second year = 672
t = 1 year (from the end of the second year to the start of the third year.)
Using the simple interest formula: I = Prt the compound and simple interest is the same for one compounding period (1 year)
r =
r = × 100 = 6.25%