I think the answer is $1,033.50, because the total amount she paid, was the cost of the hat plus the sales tax. So, to find the total sales tax you multiply 975 and 0.06 (6% in decimal form) which is $58.50. Then you add $58.50 to $975, which gives you $1,033.50. --- Hope this helps.
He already had 100 into the account so we add that, 25x is derived from the fact that x=the amount of months and 25 is the amount per a month he saves.