Answer: 12.5%
Step-by-step explanation:
Rewrite the 1.125 as 1+0.125
So we have the equation y = 254000(1+0.125)^t
Compare that to y = a(1+r)^t and you'll find that r = 0.125
In other words, solving 1+r = 1.125 leads to r = 0.125
That corresponds to a 12.5% growth rate. If r was negative, then you'd have exponential decay.