On a certain sum of money, the simple interest for 2 years is Rs. 350 at the rate of 4% per annum. It was invested at compound interest at the same rate for the same duration as before, how much more interest would be earned ?

Rate of interest = 4% and time period = 2 years

Let principal sum = Rs. $$x$$

Simple interest = $$\frac{P\times R\times T}{100}$$

=> $$\frac{x\times4\times2}{100}=350$$

=> $$x=\frac{35000}{8}=4375$$

Now, interest earned under compound interest = $$P[(1+\frac{R}{100})^T-1]$$

= $$4375[(1+\frac{4}{100})^2-1]$$

= $$4375[(\frac{26}{25})^2-1]$$

= $$4375\times\frac{676-625}{625}$$

= $$7\times51=Rs.$$ $$357$$

$$\therefore$$ Difference in interest = $$357-350=Rs.$$ $$7$$

=> Ans - (B)