Explanation:

- You are given that the interest compounded annually after two years is Rs370.

- The principal amount is Rs3,240.

- The compound interest formula is:

$$A=P{(1+\frac{r}{100})}^n$$

where $A$ is the total amount, $P$ is the principal amount, $r$ is the rate of interest, and $n$ is the time period.

- Given, $A=P+\text{Interest}=3240+370=3610$.

- We know:

$$3610=3240{(1+\frac{r}{100})}^2$$

- Dividing both sides by 3240 gives:

$$1.1142\approx {(1+\frac{r}{100})}^2$$

- Solving, $1+\frac{r}{100}\approx 1.056$ so $r\approx 5.6\mathrm{\%}$.

- The calculated rate is approximately 5.56%.

- Correct Answer: Option:3- 5.56%