Question

One of your customers is having trouble paying her account. You agree to a repayment schedule of $300 per month. You charge 1% per month interest on late accounts. If the current balance is $2000, how long will it take to pay off the debt?

Answer 1

300( 1 - 1.01^-n)/.01 = 2000
300(1 - 1.01^-n) = 20
1 - 1.01^-n = 1/15
14/15 = 1.01^-n
ln both sides and use rules of logs

ln 14 - ln15 = -n ln 1.01

n = (ln 15 - ln 14)/ln 1.01
= 6.934

appr 7 months

of course I could have used log 15 etc.
and obtained the same result.

Answer 2

7 months