Explanation:

- In compound interest, interest is calculated on the initial principal and also on the accumulated interest of previous periods, while in simple interest, it's only on the principal.

- Given the difference between compound interest and simple interest for 2 years at 4.2% is Rs8.82.

- Formula for simple interest (SI) is: SI = P × R × T/100.

- Compound interest (CI) formula when compounded annually is: CI = P × (1 + R/100)² - P.

- Given options to check:

- Option 1: Rs4,500

- Option 2: Rs2,100

- Option 3: Rs5,000

- Option 4: Rs3,000

By calculating using these formulas, Option 3 (Rs5,000) is the amount where the difference matches Rs8.82.