Explanation:

To find out which principal results in a difference of Rs. 1,725 between compound interest and simple interest over 2 years at a rate of 25% per annum, follow this approach:

- Simple Interest Calculation:

- Formula: SI = P * r * t / 100

- Here, r = 25% and t = 2 years.

- Compound Interest Calculation:

- Formula: CI = P * (1 + r/100)^t - P

- Here, r = 25% and t = 2 years.

- Difference between CI and SI:

- Given: CI - SI = Rs. 1,725

- Solving the equations with given formulae yields the principal amount.

- Checking through options, you'll find:

- Option 1: Rs. 25,600 – does not match the difference.

- Option 2: Rs. 26,500 – does not match the difference.

- Option 3: Rs. 26,400 – does not match the difference.

- Option 4: Rs. 27,600 – matches the difference of Rs. 1,725 perfectly.

Hence, the correct answer is: Option 4: Rs. 27,600.

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