Find the difference between the compound interest and simple interest when a sum of Rs.15,625 is invested for 3 years at 4% per annum.

Rs.76

Simple interest = \(\frac{P×R×T}{100}\)

= \(\frac{15625×4×3}{100}\)

= 1875

Compound interest = Principal × ( 1 + \(\frac{rate }{100}\) )t - Principal

= 15625 × ( 1 + \(\frac{4 }{100}\) )³ - 15625

= 15625 × \(\frac{26 }{25}\) × \(\frac{26 }{25}\) × \(\frac{26 }{25}\) - 15625

= 17576 - 15625

= 1951

Difference b/w CI and SI = 1951 - 1875 = Rs. 76