Loans in general operate using compound interest. Every fixed amount of time (usually a month) a payment is made and this is de- ducted from the remaining debt. An interest rate is then applied to the debt, and the pro- cess continues until the debt is cleared out.

1. If you take a loan for a new $20,000 car, a typical APR with a fair credit score is 4.8% interest. If you make monthly pay- ments of A dollars, find an expression for your debt right after your first payment.

2. How much debt is left right after the sec- ond payment?

3. Find a sequence dn that gives the re- maining debt right after the nth month.

4. Find your monthly payment A if you want to pay your loan in 5 years.

5. How much total interest would you pay for the car?