Solution-How much is the constant amount

How much is the constant amount

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1. A college student in her senior year is considering purchasing a new car. The price of the car is $18,500, the sales tax is 8%, and the title, license, and registration fee is $450. The dealer has an innovative financing program for new college graduates that starts with a small monthly payment and the payments will gradually increase. The dealer offered to finance 90% of the price of the car for 48 months at a nominal interest rate of 9% per year, compounded monthly. The first payment is $200 and each successive payment will increase by a constant dollar amount ‘x.'

(a) How much is the constant amount "x"?

(b) How much is the 48th payment?

2. The new copier your company has recently bought is expected to incur the following repair costs:

Year Repair Cost
1 $ 0
2 500
3 500
4 1500
5 2000

The dealer has offered you a 5-year maintenance contract for $800 per year payable at the end of each year. Your company's MARR is 6% per year. Is this a good deal

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How much is the constant amount

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