Remember that
The simple interest formula is equal to


where
A is the Final Investment Value
P is the Principal amount of money to be invested
r is the rate of interest
t is Number of Time Periods
in this problem we have
P=$875
r=5 1/4%=5+1/4=5.25%=5.25/100=0.0525
t=3 years
substitute

The new balance is
A=P+I
A=875+137.81
A=$1,012.85