Correct Answer - Option 1 : Rs. 62.5
Given:
The principal is Rs. 25,000
Rate is 5% per annum
Time is 2 years
Formula used:
SI - CI = P(R/100)2
where SI = Simple Interest, CI = Compound interest, P = Principal, R = Rate
Calculations:
Principal is Rs. 25,000
Rate is 5% per annum
Difference between the compound interest and simple interest is
⇒ SI - CI = P(R/100)2
⇒ SI - CI = 25,000 × (5/100)2
⇒ SI - CI = (25,000 × 25)/10,000
⇒ SI - CI = 6,25,000/10,000
⇒ SI - CI = 62.5
∴ The Difference between the compound interest and simple interest is Rs. 62.5
