On a certain sum of money, the simple interest for 2 years is ₹150 at the rate of 10% per annum. What is the difference between the compound interest and the simple interest for 2 years if, in the case of compound interest, interest is compounded annually at the rate of 10% per annum.

₹7.5

Given SI = Rs. 150

By using formula ,

Simple interest = \(\frac{Principal ×Rate × Time }{100}\)

150 = \(\frac{Principal × 10 × 2 }{100}\)

Principal = 750

Now , Compound interest rate = 10%

Amount = P×  ( 1 + \(\frac{R }{100}\) )^t

= 750 × ( 1 + \(\frac{10 }{100}\) )²

= 750 × \(\frac{11 }{10}\) × \(\frac{11 }{10}\)

= 907.5

Amount = Principal + Interest

Compound interest = 907.5 - 750 = 157.5

Required difference b/w Simple interest and  Compound interest = 157.5 - 150

= Rs. 7.5