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You are looking to purchase a new car, and you expect to have annual maintenance costs to keep it running.

You are looking to purchase a new car, and you expect to have annual maintenance costs to keep it running. According to your calculations, you expect to incur $150 maintenance costs in the first year and expect the costs to increase by $100 for the next 7 years. You plan to keep the car for 8 years in total. How much money should you have in your savings account today, so that you do not have to worry about maintenance? The savings account pays 2% per year, compounded annually.

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