Moses is solving the problem below. A box of spaghetti at the grocery store is purchased for $1.60 wholesale and is marked up by 60 percent. Then, the store marks down the item by 20 percent. A customer wants to buy three boxes of spaghetti. How much will the customer pay, including paying 8 percent sales tax? Round your answer to the nearest cent.

Look at the table below.

Steps
Moses’s work
Step 1
1 dollar and 60 cents (1.6) = 2 dollars and 56 cents
Step 2
2 dollars and 56 cents (0.80) = 2 dollars and 5 cents
Step 3
2 dollars and 5 cents (3) = 8 dollars and 20 cents
Step 4
8 dollars and 20 cents (1.08) = 8 dollars and 86 cents

In which step did Moses first make a mistake in his work?