This is an exponential growth/decay problem.
So, we use the formula y=ab^x.
1250 is what you started out with, so it is your initial value.
We have to change the percentile to a decimal, so we will move the decimal two places to the left, making it 0.065. We see in the problem that the word "compounded" is brought up, implying an increase. Therefore, 0.065 will be added by 1 to get 1.065. You place that value into the parentheses.
The x represents the amount of time, which is 8 years.
So, 1250(1.065)^8 = 2,069 (answer was 2068.74 before being rounded).
