Answer is A
If the difference between compound and simple interest is of two years then, direct formula can be applied.
$Difference =Principal(1+\frac{Rate}{100})^{2}$
Rs.1 $=P*(\frac{4}{100})^{2}$
P = Rs.625
Difference between simple and compound interests is of 3 years = $3P(\frac{R}{100})^{2}+P(\frac{R}{100})^{3}$
Above formulae can be used only if the difference between CI and SI are 2 years and 3 years.