The difference between simple interest and compound interest on Rs. 1250 for 2 years at 4% per annum is:

Answer

To find the difference between simple interest and compound interest on Rs. 1250 for 2 years at 4% per annum, we will follow these steps:

### Step 1: Calculate Simple Interest (SI)
The formula for Simple Interest is:
\[ SI = \frac{P \times R \times T}{100} \]
Where:
- \(P\) = Principal amount = Rs. 1250
- \(R\) = Rate of interest = 4%
- \(T\) = Time in years = 2

Substituting the values:
\[ SI = \frac{1250 \times 4 \times 2}{100} \]
Calculating:
\[ SI = \frac{1250 \times 8}{100} = \frac{10000}{100} = 100 \]
So, the Simple Interest for 2 years is Rs. 100.

### Step 2: Calculate Compound Interest (CI)
The formula for Compound Interest is:
\[ CI = P \left(1 + \frac{R}{100}\right)^T - P \]
Substituting the values:
\[ CI = 1250 \left(1 + \frac{4}{100}\right)^2 - 1250 \]
Calculating \(1 + \frac{4}{100}\):
\[ 1 + \frac{4}{100} = 1 + 0.04 = 1.04 \]
Now, calculating \(1.04^2\):
\[ 1.04^2 = 1.0816 \]
Now substituting back into the CI formula:
\[ CI = 1250 \times 1.0816 - 1250 \]
Calculating:
\[ CI = 1352 - 1250 = 102 \]
So, the Compound Interest for 2 years is Rs. 102.

### Step 3: Calculate the Difference between CI and SI
Now, we find the difference:
\[ \text{Difference} = CI - SI = 102 - 100 = 2 \]

### Final Answer
The difference between Simple Interest and Compound Interest on Rs. 1250 for 2 years at 4% per annum is Rs. 2.

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