The difference between simple interest and compound interest on a certain principal amount, for 2 years at the rate of 5 percent per annum, is Rs 11.25. Find the principal amount.

The principal is Rs 4500.

For 2 years the CI minus SI equals P x (r/100) x (r/100).

Here r = 5, so the factor = (5/100) x (5/100) = 0.0025.

Thus P x 0.0025 = 11.25.

P = 11.25/0.0025 = 4500.

Method: 2-year CI-SI difference formula.