The simple interest on a certain sum at the end of three years at 5%p.a. is Rs.1,200. The compound interest on the same sum for the same period at the same rate is (interest compounded yearly):

The correct answer is Rs. 1,261 (Option B). First, find the principal using simple interest: SI = P × R × T / 100, so 1200 = P × 5 × 3 / 100, giving P = 1200 × 100 / 15 = Rs. 8000. For compound interest compounded yearly for 3 years at 5%: Amount = 8000 × (1.05)³ = 8000 × 1.157625 = Rs. 9261. Compound Interest = Amount - Principal = 9261 - 8000 = Rs. 1261. The difference between CI and SI is Rs. 61 (1261 - 1200).