Step 1: Set up the growth year by year.
Instead of using the compound growth formula directly, we can build up the population decade by decade. Starting population in 2025 is $175000$, and it grows by $8.5\%$ each decade.
Step 2: Population after the first decade (2035).
$$P_{2035} = 175000 + 175000 \times 0.085 = 175000 \times 1.085 = 189875$$
Step 3: Population after the second decade (2045).
$$P_{2045} = 189875 \times 1.085 = 205984.375$$
Step 4: Population after the third decade (2055).
$$P_{2055} = 205984.375 \times 1.085 \approx 223525.6$$
This matches the direct formula $175000 \times (1.085)^3$, confirming the population.
Step 5: Compute the water demand.
Multiply the 2055 population by the per capita demand of 175 litres/day, then convert to million litres per day (divide by $10^6$).
$$\text{Demand} = \frac{223525.6 \times 175}{1000000} = \frac{39116980}{1000000} \approx 39.12 \text{ MLD}$$
Final Answer:
The total daily domestic water demand of the city in 2055 is close to 39.12 million litres per day.