Find the difference between simple interest and compound interest on ₹ 4,000 for two years at 10% per annum.

P = ₹ 4,000, R = 10 %, T = 2 years

$\text{S.I.} = \dfrac{P \times R \times T}{100}\\[1em] = \dfrac{4,000 \times 10 \times 2}{100}\\[1em] = \dfrac{80,000}{100}\\[1em] = 800$

C.I. = P $\Big(1 + \dfrac{R}{100}\Big)^n$ - P

= 4,000 x $\Big(1 + \dfrac{10}{100}\Big)^2$ - 4,000

= 4,000 x $\Big(1 + 0.1\Big)^2$ - 4,000

= 4,000 x $(1.1)^2$ - 4,000

= 4,000 x 1.21 - 4,000

= 4,840 - 4,000

= 840

The Difference between C.I. and S.I. = ₹ 840 - 800 = ₹ 40

Hence, the difference between simple interest and compound interest = ₹ 40.