If the simple interest on a certain principal at 4% per annum for 2 years is Rs. 80, what will be the compound interest on the same principal amount for the same duration?

Explanation

The simple interest for 2 years at 4% per annum is Rs. 80, so the interest for one year is Rs. 40. Compound interest for 2 years is calculated as: CI = 40 + 40 + (40 × 40 × 0.04) / 100 = 80 + 1.6 = Rs. 81.60.