Given that, at each of the five levels, the price of the product is increased by $25\%.$
Then, the price paid (in rupees) by the customers $ = 120 \times \frac{125}{100} \times \frac{125}{100} \times \frac{125}{100} \times \frac{125}{100} \times \frac{125}{100} = \frac{46875}{128} = 366.21.$
$\text{(Or)}$
The price paid (in rupees) by the customers $ = (1.25)^{5} \times 120 = 366.21.$
So, the correct answer is $(D).$