Answer:
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Answer:
The new account balance is <u>$812</u>.
Step-by-step explanation:
Given:
Larry Thomas's charge account statement shows an unpaid balance of $800.
The monthly finance charge is 1.5% of the unpaid balance.
Now, to find the new account balance.
Unpaid balance = $800.
Monthly finance charge of the unpaid balance = 1.5%.
Now, to get the new account balance:
$800 + 1.5% of $800.
Therefore, the new account balance is $812.
This question can be approached using the present value of annuity formula. The present value of annuity is given by 
, where: PV is the present value/amount of the loan, P is the periodic (monthly in this case) payment, r is the APR, t is the number of payments in one year and n is the number of years.
Given that the<span> financing is for a new road bike of $2,500 and that the bike shop offers a 13.5% APR for a 24 month loan.
Thus, PV = $2,500; r = 13.5% = 0.135; t = 12 payments (since payment is made monthly); n = 2 years (i.e. 24 months)
Thus,
</span>
<span>
Therefore, his monthly payment is $119.44</span>
Given that the<span> financing is for a new road bike of $2,500 and that the bike shop offers a 13.5% APR for a 24 month loan.
Thus, PV = $2,500; r = 13.5% = 0.135; t = 12 payments (since payment is made monthly); n = 2 years (i.e. 24 months)
Thus,
</span>
<span>
Therefore, his monthly payment is $119.44</span>