Hilton Bright
05/02/2023 · Elementary School
Determine the number of months to complete paying for the balance.
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Quick Answer
To find out how many months it will take to pay off a balance, use the formula:
\[
n = \frac{-\ln\left(1 - \frac{r \times B}{P}\right)}{\ln(1 + r)}
\]
Where:
- \( n \) = number of months
- \( B \) = principal balance
- \( r \) = monthly interest rate
- \( P \) = monthly payment
**Steps:**
1. Convert annual interest rate to monthly.
2. Ensure your monthly payment is greater than the monthly interest.
3. Plug the values into the formula to calculate \( n \).
**Example:**
For a $10,000 balance at 5% annual interest with a $200 monthly payment, it will take approximately 56 months to pay off.
So, the number of months needed is **56 months**.
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