This is not the answer your professor is looking for... but please don't ever use double or float for monetary units. Things can go so wrong its not even funny... and the amount of time you spend looking for off by a penny errors will make you question your sanity.

The right way to do this would be to use BigDecimal on the value "12500" and then adjust the number to go from cents to dollars.

import java.math.BigDecimal;

public class BigD {
  public static void main (String[] args) {
    BigDecimal cents = new BigDecimal("12500");
    System.out.println(cents.toString());
    BigDecimal dollars = cents.movePointLeft(2);
    System.out.println(dollars.toString());
  }
}

(ideone)

Give Why not use Double or Float to represent currency? and When do rounding problems become a real problem? Is the least significant digit being one off really a big deal? a read. How to calculate monetary values in Java has another nice simple that shows some errors in floating point.

Even though you may be able to print the value out correctly, it doesn't mean that it is represented correctly.

12500 and 125 happen to be nice numbers in there... but 125.01 is actually 125.010000000000005115907697473

There is a slight difference between these two formats. The "#.##" means it will print the number with maximum two decimal places whereas "#.00" means it will always display two decimal places and if the decimal places are less than two, it will replace them with zeros. see the example below with output.

public static final DecimalFormat df1 = new DecimalFormat( "#.##" );
public static final DecimalFormat df2 = new DecimalFormat( "#.00" );

System.out.println(df1.format(7.80));
System.out.println(df1.format(85));
System.out.println(df1.format(85.786));

System.out.println(df2.format(7.80));
System.out.println(df2.format(85));
System.out.println(df2.format(85.786));

And the output will be

7.8
85
85.79

7.80
85.00
85.79