What is the difference between the simple interest on a principal of Rs. 500 being calculated at 5% per annum for 3 years and 4% per annum for 4 years?

Answer: Option A

$$\begin{array}{rl}& I_1=\frac{P{T}_1{R}_1}{100}\\ & I_1=\frac{500\times 3\times 5}{100}\\ & =Rs.75\\ & I_2=\frac{P{T}_2{R}_2}{100}\\ & I_2=\frac{500\times 4\times 4}{100}\\ & =Rs.80\\ & \text{Difference}=80-75\\ & =\text{Rs}\text{.}5\end{array}$$

Alternatively
The interest is calculated simply and then it will have a rise of 15% in 1^st case and 16% in 2^nd case.
Difference = 1% on 500 = Rs. 5

Otherway,
500 == 15% $$\uparrow$$ ⇒ 575 (1^st case)
500 == 16% $$\uparrow$$ ⇒ 580 (2^nd case)
We can see clear difference of Rs. 5