There is 40% increase in an amount in 10 years at simple interest. What will be the compound interest of Rs 25000 after 2 years at the same rate?

Let the principal = $$Rs. 100x$$

=> Amount after simple interest = $$Rs. 140x$$

=> Simple interest = $$140x - 100x = Rs. 40x$$

Simple interest = $$\frac{P \times R \times T}{100}$$

=> $$40x = \frac{100x \times 10 \times R}{100}$$

=> $$R = \frac{40}{10} = 4\%$$

Compound interest of Rs. 25,000 for 2 years = $$P [(1 + \frac{R}{100})^T - 1]$$

= $$25,000 [(1 + \frac{4}{100})^2 - 1]$$

= $$25,000 [(\frac{26}{25})^2 - 1]$$

= $$25,000 \times \frac{676 - 625}{676} = 25,000 \times \frac{51}{625}$$

= $$40 \times 51 = Rs. 2,040$$