Let us assume last year the price of the item = $x.
After increase in price by 15% the new price = x + 15% of x = x+ 0.15x = 1.15x.
There is a 25% discount for employee.
25% of 1.15x = 0.25 × 1.15x = 0.2875 x.
Price after discount = 1.15x - 0.2875 x = 0.8625x.
The employee pays $172.50.
Therefore,
0.8625x = 172.50.
Dividing both sides by 0.08625.