In the case of compound interest, the rate of interest increased successively. And in the case of the simple interest rate of interest is the same for every year The effective rate of interest of two years in the case of compound interest. {5 + 5 + (5×5)/100} = 10.25% Effective rate of interest for two years in case of simple interest 5 + 5 = 10% According to question: Difference of Compound interest and simple interest = Rs.6 As we calculated: 10.25% - 10% = 0.25% ⇒ 0.25% = Rs.6 ⇒ 100% = 2400 ∴ the principal is Rs.2400