What is the difference between the compound interest and simple interest on Rs 8000 at an annual rate of 5% over 3 years?

Explanation

Simple interest (S.I) is calculated as Rs 8000 × 5/100 × 3 = Rs 1200. Compound interest (C.I) is Rs 8000 × (1 + 5/100)^3 - Rs 8000 = Rs 8000 × (21/20)^3 - Rs 8000 = Rs 9261 - Rs 8000 = Rs 1261. The difference between compound interest and simple interest is Rs 1261 - Rs 1200 = Rs 61.