What is the difference between the compound interest (compounded annually) and the simple interest on ₹8,000 at 10% per annum for 3 years?

Explanation

1. 01

   For 3 years, CI − SI = $P\left(\frac{R}{100}\right)^2\left(3 + \frac{R}{100}\right)$.

2. 02

   = $8000 \times \frac{1}{100} \times 3.1 = 80 \times 3.1 = 248$.

3. 03

   Check: CI = $8{,}000 \times 1.331 - 8{,}000$ = ₹2,648; SI = ₹2,400; difference = ₹248.