Explanation:

To find the difference between simple interest and compound interest on a sum of Rs. 6,500 at 7% per annum for 3 years:

- Simple Interest (SI):

- Calculate using the formula: SI = PRT/100

- Where P = 6500, R = 7, T = 3

- SI = (6500 * 7 * 3) / 100 = Rs. 1,365

- Compound Interest (CI):

- Calculate using the formula: CI = P(1 + R/100)^T - P

- CI = 6500 * (1 + 7/100)^3 - 6500

- CI = 6500 * (1.07)^3 - 6500

- CI = 6500 * 1.225043 - 6500

- CI ˜ Rs. 1,462.73

- Difference:

- Difference = CI - SI

- Difference = 1462.73 - 1365 = Rs. 97.73

- Match options:

- Option 1: Rs. 94.34

- Option 2: Rs. 97.78

- Option 3: Rs. 98.73

- Option 4: Rs. 95.67

- Correct Answer: Rs. 97.73 (closest to Option 2)

Based on calculations, Option 2: Rs. 97.78 is Correct. .