What will be the difference between S.I and C.I on a sum of Tk. 1200 for 2 years at the same rate of interest of (25/2)% per annum?

Question: What will be the difference between S.I and C.I on a sum of Tk. 1200 for 2 years at the same rate of interest of (25/2)% per annum?

Solution:
Interest rate r = (25/2)% = 1/8

S.I. = (1200 × 2 × 1)/8 = Tk. 300

C.I. = [1200 × (1 + 1/8)² - 1200]
= [1200 × (9/8) × (9/8) -1200
= 1518.75 - 1200
= Tk. 318.75

Difference = (318.75 - 300) = Tk.18.75