From the given, there are 5 letters to choose from. For the first letter of the three-letter word, we can choose from all 5 of them.
Also, for the second letter of the word, we can also have 5 choices because it is stated that repetition is allowed. Similarly, there are also 5 choices for the last letter of the word. By fundamental principle of counting, we multiply the numbers identified in the sentences above,
n = 5 x 5 x 5 = 125
Thus, 125 words can be formed from the given letters.