The simple interest on a certain sum at the end of three years at 5%p.a. is ₹1,200. The compound interest on the same sum for the same period at the same rate is (interest compounded yearly):

₹1,261

The formula that we used here is :-

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

1200 = \(\frac{P × 5 × 3 }{100}\)

P = 8000

The Formula that we used here is -

CI = P$(1 \;+\; \frac{R}{100})^t$ - P

= 8000 × [ 1 + \(\frac{5 }{100}\) ]³ - P

= 8000 × \(\frac{21}{20}\) × \(\frac{21}{20}\) × \(\frac{21}{20}\) - 8000

= 9261 - 8000

= 1261