1. David Puddy is hoping to purchase a nice new car for $30,000 in two years. At that time he plans on taking out a 5-year loan with monthly payments and an APR of 4.75%. Based on his estimated earnings, Puddy thinks he will be able to afford monthly payments of $400 per month. Puddy plans on saving for the difference between the cost of the car and the amount he'll borrow by making monthly deposits over the next two years in a bank account that yields an annual rate of 3%.

a. What is the amount of the down payment Puddy will need to purchase this car he wants to buy in two years?

b. What is the amount of the monthly savings deposits Puddy will need to make in order to save up the amount he needs for the down payment?