What is the difference between compound interest and simple interest on Rs. 5,000 for 2 years at 4 per cent per annum according as the interest is compounded yearly?A)2.04B)3.06C)4.80D)5.50

To solve this problem, we first need to understand the formulas for simple interest and compound interest.

1. Simple Interest (SI) is calculated as follows: SI = (Principal amount * Rate * Time) / 100 So, for a principal amount of Rs. 5000, a rate of 4% per annum, and a time of 2 years, the simple interest would be: SI = (5000 * 4 * 2) / 100 = Rs. 400

2. Compound Interest (CI) is calculated as follows: CI = Principal amount * (1 + Rate/100) ^ Time - Principal amount So, for the same principal amount, rate, and time, the compound interest would be: CI = 5000 * (1 + 4/100) ^ 2 - 5000 = Rs. 408.00

The difference between the compound interest and the simple interest is therefore Rs. 408.00 - Rs. 400 = Rs. 8.00.

However, none of the options provided (A) 2.04, B) 3.06, C) 4.80, D) 5.50) match this result. It's possible there may be a mistake in the question or the provided options.