### Theory:

Simple interest means calculating the interest over the period at the rate of interest per annum and principal.

But for compound interest, the interest of the first year will be added to the principal which is considered as the principal for next year.

So we can find that there is no difference in $$S.I$$ and $$C.I$$ for the first conversion period.

To calculate the difference in $$2$$ years:
Therefore to calculate the difference in the second year between the $$C.I$$ and $$S.I$$ if principal $$P$$ and rate of interest per annum $$r$$ is given, we can use the formula which is:

$C.I\phantom{\rule{0.147em}{0ex}}-S.I\phantom{\rule{0.147em}{0ex}}=\phantom{\rule{0.147em}{0ex}}P{\left(\phantom{\rule{0.147em}{0ex}}\frac{r}{100}\right)}^{2}$
To calculate the difference in $$3$$ years:
To calculate the difference in the third year between the $$C.I$$ and $$S.I$$ if principal $$P$$ and at the rate of interest per annum $$r$$ is given, we can use the formula, that is:

$C.I\phantom{\rule{0.147em}{0ex}}-S.I\phantom{\rule{0.147em}{0ex}}=\phantom{\rule{0.147em}{0ex}}P{\left(\phantom{\rule{0.147em}{0ex}}\frac{r}{100}\right)}^{2}\left(3+\frac{r}{100}\right)$