Contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology
A college student is buying a new car, which costs $16,500 plus 8% sales tax. The title, license, and registration fees are $650. The dealer offers her a financing program that starts with a small monthly payment, and the payments will gradually increase. The dealer offers to finance 80% of the car's price for 48 months at a nominal interest rate of 9% per year, compounded monthly. The first payment is $300 and each successive payment will increase by a constant dollaramount x.
(a) How much is the constant amount x?
(b) How much is the 48th payment?