2) Tom purchases a professional racing bicycle that sells for 4,000 , including tax. It requires a 300 down payment. The remainder, plus a finance charge, is paid back monthly over the next 2(1)/(2) years. The monthly payment is 132.75 What is the finance charge?

## Step 1: Calculate the loan amount<br />### The bicycle costs $4000 and Tom makes a down payment of $300. So, the loan amount is $4000 - $300 = $3700.<br /><br />## Step 2: Calculate the total amount paid<br />### Tom pays $132.75 monthly for $2\frac{1}{2}$ years, which is equivalent to 30 months (2.5 years * 12 months/year). Therefore, the total amount paid is $132.75 \times 30 = $3982.50.<br /><br />## Step 3: Calculate the finance charge<br />### The finance charge is the difference between the total amount paid and the loan amount. So, the finance charge is $3982.50 - $3700 = $282.50.