The formula for the area of a circle is
.
It is apparent from the diagram and information in the question that the diameter is the distance between
X and
Y.
Since we are only given the length of the diameter (which is always twice the radius), we'll need to divide 1.62 by 2 to arrive at the radius for use in the above formula.
1.62 ÷ 2 = 0.81
Plugging that figure into the formula:
A = 3.14 × 0.6561
A = 2.060154
This is 2.06, when rounded to two decimal places, per instructions in the question.