If the simple interest on a principal amount at an annual rate of 4% for 2 years is Rs. 80, what will be the compound interest on the same principal over the same duration?

Explanation

Given the simple interest is Rs. 80 at 4% per annum for 2 years, the principal is calculated as Rs. 1000. Using the compound interest formula, CI = 1000 × (1 + 0.04)^2 – 1000 = Rs. 81.60.