(b) Rs 3
P = Rs 1200, R = 10% p.a., T = 1 year
\(\therefore\) S.I. = \(\frac{P\times R\times T}{100}\) = \(\frac{1200\times 10\times 1}{100}\) = Rs 120
For C.I. reckoned half yearly,
P = Rs 1200, r = 5% per half year, n = 2 half year
\(\therefore\) C.I = Rs \(\Big(1200\big(1+\frac{5}{100}\big)^2-1200\Big)\)
= Rs\(\big(1200\times\frac{21}{20}\times\frac{21}{20}-1200\big)\)
= Rs 1323- Rs 1200 = Rs 123.
\(\therefore\) Required difference = Rs 123 – Rs 120 = Rs 3.