Tiffany was supposed to make a payment of $5,000 in 3 years and another payment of $1,400 in 4 years to Loon Company as part of a payment plan. Instead, she is trying to reach an agreement with the company where she would pay an upfront amount now, and an amount of $1,200 in 5 years. Assume that money is worth 5.16% compounded quarterly.

a. Calculate the equivalent value of the $5,000 payment and the $1,400 payment today.

b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent.