You wish to save for a down payment on a car. You can afford to save $400 each month, which you will place into a savings account at the end of each month. The savings account pays you .25% monthly interest.
(a) How much have you saved at the end of 4 years?
(b) If you need 15% of the purchase price as a down payment, what is the maximum price of the car? Show cash flow diagram from the standpoint of the savings account owner. Show your work and final answer(s).