Umesh earns a simple interest of ₹1,600 on a certain sum in two years at the rate of 4% per annum. How much more interest would he have earned if he had invested the same sum at 4% interest per annum, compounded annually?

₹32

The formula used here is,

Difference in the simple interest and compound interest on a certain sum = $\frac{P × R}{200}$

⇒  $\frac{1600 × 4}{200}$

⇒  Rs. 32