To find the sum of money, we need to calculate the difference between compound interest and simple interest.

Compound interest is calculated using the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal sum, r is the rate of interest, n is the number of times interest is compounded per year, and t is the number of years.

Simple interest is calculated using the formula A = P(1 + rt), where A is the final amount, P is the principal sum, r is the rate of interest, and t is the number of years.

Given that the difference between compound interest and simple interest is 250, we can set up the following equation:

P(1 + r/n)^(nt) - P(1 + rt) = 250

We are given that the rate of interest is 5% per year and the time period is 2 years.

Plugging in these values, the equation becomes:

P(1 + 0.05/1)^(1*2) - P(1 + 0.05*2) = 250

Simplifying further, we get:

P(1.05)^2 - P(1