UpStudy Free Solution:

To calculate the monthly interest owed on a balance of $1800 at an annual percentage rate (APR) of 28.99%, we need to follow these steps:

1. Convert the annual percentage rate to a monthly rate:

\[\text { Monthly Rate} = \frac { \text { APR} } { 12} = \frac { 28.99\% } { 12} = \frac { 28.99} { 12} \approx 2.416\% \]

2. Convert the percentage to a decimal:

\[2.416\% = \frac { 2.416} { 100} = 0.02416\]

3. Calculate the monthly interest:

\[\text { Monthly Interest} = \text { Balance} \times \text { Monthly Rate} = 1800 \times 0.02416 \approx 43.49\]

Therefore, the approximate interest you would owe in one month is closest to $40.

So, the correct answer is: \(\$ 40\)

Supplemental Knowledge

Understanding how to calculate monthly interest on a balance is crucial for managing personal finances, especially when dealing with credit cards or loans. The process involves converting an annual percentage rate (APR) to a monthly rate and then applying this rate to the outstanding balance.

Key Concepts:

1. Annual Percentage Rate (APR):

- APR represents the yearly interest rate charged on borrowed money.

- It includes any fees or additional costs associated with the transaction.

2. Monthly Interest Rate:

- To find the monthly interest rate from an APR, divide the APR by 12 (the number of months in a year).

\[\text { Monthly Rate} = \frac { \text { APR} } { 12} \]

3. Converting Percentage to Decimal:

- To use the percentage in calculations, convert it to a decimal by dividing by 100.

\[\text { Decimal Rate} = \frac { \text { Percentage} } { 100} \]

4. Calculating Monthly Interest:

- Multiply the balance by the monthly decimal rate to find the interest for one month.

\[\text { Monthly Interest} = \text { Balance} \times \text { Monthly Decimal Rate} \]

Example Problem:

Let's consider another example for better understanding:

- Calculate the monthly interest owed on a balance of $2500 at an APR of 18%.

1. Convert the annual percentage rate to a monthly rate:

\[\text { Monthly Rate} = \frac { \text { APR} } { 12} = \frac { 18\% } { 12} = 1.5\% \]

2. Convert the percentage to a decimal:

\[1.5\% = \frac { 1.5} { 100} = 0.015\]

3. Calculate the monthly interest:

\( \text { Monthly Interest} = 2500 \times 0.015 = 37.50 \)

Thus, you would owe $37.50 in interest for one month.

Effective financial management begins by understanding interest's role on balances and loans. Knowing how credit card interest works or organizing loan repayment plans are both integral skills in maintaining overall financial health.
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