Mahindra set up a factory by investing ₹2500000. During the first two years, his profits were 5% and 10% respectively. If each year the profit was on previous year's capital, calculate his total profit.

When rate of interest are different then total amount is given by,

$A = P\Big(1 + \dfrac{r$1}{100}\Big)\Big(1 + \dfrac{r2}{100}\Big)

Substituting values we get,

$A = ₹2500000\Big(1 + \dfrac{5}{100}\Big)\Big(1 + \dfrac{10}{100}\Big) \\[1em] = ₹2500000\Big(1 + \dfrac{1}{20}\Big)\Big(1 + \dfrac{1}{10}\Big) \\[1em] = ₹2500000 \times \dfrac{21}{20} \times \dfrac{11}{10} \\[1em] = \dfrac{₹2500000 \times 21 \times 11}{20 \times 10} \\[1em] = ₹12500 \times 21 \times 11 \\[1em] = ₹2887500.$

Profit = Amount - Principal = ₹2887500 - ₹2500000 = ₹387500

Hence, profit = ₹387500.