Question

what is the monthly interest payment for an account with a balance of $120.00 and an a.p.r. of 20%? $? round to the nearest cent.

Explanation:

Step1: Convert APR to monthly rate

The annual percentage rate (APR) is 20%, so the monthly interest rate \( r \) is the APR divided by 12.
\( r=\frac{20\%}{12}=\frac{0.20}{12} \)

Step2: Calculate monthly interest payment

The monthly interest payment \( I \) is calculated by multiplying the account balance \( P \) by the monthly interest rate \( r \). The balance \( P = 120 \) dollars.
\( I = P\times r=120\times\frac{0.20}{12} \)
First, calculate \( 120\times0.20 = 24 \), then divide by 12: \( \frac{24}{12}=2 \)

Answer:

\( \$2.00 \)