The Interest rate on the line of credit is 7.5% compounded monthly Jane and Bill must pay the interest every month, and may pay down the principal when they can. How much must they pay each month? [A3]

## Step 1: Convert the annual interest rate to a monthly rate.<br />### The annual interest rate is 7.5%. To find the monthly rate, divide by 12. $r_{monthly} = \frac{7.5\%}{12} = \frac{0.075}{12} = 0.00625$.<br /><br />## Step 2: Calculate the monthly interest payment.<br />### The question states Jane and Bill *must pay the interest every month*. It does not specify a principal amount. Let's represent the principal amount as $P$. The monthly interest payment is calculated by multiplying the principal by the monthly interest rate. $Interest\ Payment = P \times r_{monthly} = P \times 0.00625 = 0.00625P$.