You are saving to buy a new car in two years. You currently have $3000 in an account that pays 8% annual interest compounded quarterly. You plan on adding to that account with quarterly deposits of $400 each over the next two years. Then you will take the balance of that account to use as a down payment on your new car. You expect the car you want will cost $34,000 and that you will be able to get a loan from the dealer at a 12% annual rate for a four-year term.
a. How much will you have accumulated for the down payment?