The difference between the simple interest and compound interest (compounded annually) on Rs. 40,000 for 3 years at 8% per annum is

Principal (P) = Rs. 40,000

Rate of interest (r) = 8% and time period (t) = 3 years

Simple interest = $$\frac{P \times r \times t}{100}$$

= $$\frac{40,000 \times 8 \times 3}{100}$$

= $$400 \times 24=Rs.$$ $$9600$$

Compound interest = $$P[(1+\frac{r}{100})^t-1]$$

= $$40,000[(1+\frac{8}{100})^3-1]$$

= $$40,000[(\frac{27}{25})^3-1]$$

= $$40,000 (\frac{19683-15625}{15625})=40,000 \times \frac{4058}{15625}$$

= $$Rs.$$ $$10388.48$$

$$\therefore$$ C.I. - S.I. = $$10388.48-9600=Rs.$$ $$788.48$$

=> Ans - (B)