Find the difference between C.I. and S.I. on sum of ₹4800 for 2 years at 5% per annum payable yearly.

S.I. = $\dfrac{P \times R \times T}{100}$.

Putting values in formula we get,

$S.I. = \dfrac{4800 \times 5 \times 2}{100} \\[1em] = \dfrac{48000}{100} \\[1em] = ₹480.$

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

Putting values in formula we get,

$C.I. = P\Big[\Big(1 + \dfrac{r}{100}\Big)^n - 1\Big] \\[1em] = ₹4800 \times \Big[\Big(1 + \dfrac{5}{100}\Big)^2 - 1\Big] \\[1em] = ₹4800 \times \Big[\Big(\dfrac{105}{100}\Big)^2 - 1\Big] \\[1em] = ₹4800 \times \Big[\Big(\dfrac{21}{20}\Big)^2 - 1\Big] \\[1em] = ₹4800 \times \Big[\dfrac{441}{400} - 1\Big] \\[1em] = ₹4800 \times \Big[\dfrac{441 - 400}{400}\Big] \\[1em] = ₹4800 \times \Big[\dfrac{41}{400}\Big] \\[1em] = ₹\dfrac{196800}{400} \\[1em] = ₹492.$

C.I. - S.I. = ₹492 - ₹480 = ₹12.

Hence, the difference between C.I. and S.I. = ₹12.