Answer:
$506
Explanation:
Since the value goes down by 25% each year, each new value is 75% of the previous value.
New: $1600
After 1 year: 75% × $1600 = $1200
After 2 years: 75% × $1200 = $900
After 2 years: 75% × $900 = $675
After 2 years: 75% × $675 = $506.25
Answer: $506