The difference between compound interest (compounded annually)

The difference between compound interest (compounded annually) and simple interest on a certain sum of money at 10% per annum for 2 years is ₹ 40. The sum is :

Difference = C.I. - S.I. = ₹ 40 , Time = 2 years , Rate = 10%
Let the principal be P.
Using the given formula ,

Compound interest = P			1 +	R		^t	− 1
				100

C.I. = P			1 +	10		²	− 1
				100

C.I. = P [(1.1)² – 1]
C.I. = P (1.21 – 1) = 0.21P

SI =	P × 2 × 10	=	P	= 0.2P
	100		5

According to the question,
C.I. - S.I. = 40
0.21P – 0.2P = 40
⇒ 0.01P = 40

⇒ P =	40	= ₹ 4000
	0.01

We can find required answer with the help of given formula :
Here, C.I. – S.I. = ₹ 40 , R = 10% , T = 2 years, P = ?

C.I. − S.I. = P		R		²
		100

40 = P		10		²
		100

P = ₹ 4000