#### Explanation:

As the investment is loosing value at the rate of 2% every year,

original value of an investment $I$ after $n$ years would be

$I {\left(1 - \frac{2}{100}\right)}^{n} = I \times {\left(0.98\right)}^{n}$

As original investment was $1250 three years ago, its present value is $1250 \times {0.98}^{3}$= 1250xx0.9412=$1176.49 or \$1176 to the nearest dollar.