From the four corners of a rectangular sheet of dimensions 25 cm $\times$ 20 cm, square of side 2 cm is cut off from four corners and a box is made. The volume of the box is

The above diagram shows the rectangle of dimensions $25 \times 20$ cm.

When squares of side $2$ cm are cut out from each side.

The new length $= 25 - 2 -2 = 21$ cm

The new breadth $= 20 - 2 -2 = 16$ cm

When folded, the height will be $2$ cm

Hence, the volume will be $21 \times 16 \times 2 = 672 \text{ cm}^3$

Hence, the correct option is Option 2.