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How long will it take Kate to pay for her furniture set if she chooses to payonly the minimum monthly payment of 2% of the outstanding balance? Her furniture set cost \$3,750 financed at 19 3/4% annual interest.

Truthfully, if Kate always pays only 2% of the balance, she will NEVER pay 100% of the balance or payoff her furniture.

You can use a spreadsheet to calculate the monthly payments and balances.

each month the previous month's balance is charged interest 1.1975^(1/12)=1.015133033
then 2% is paid and deducted from the balance.
the next month the remainder is charged interest and 2% is paid and so on.

The first few rows will look like this:

Balance                 Balance
before                   after
month payment  payment  payment
0   \$3,750.00
1   \$3,806.75  \$76.13    \$3,730.61
2   \$3,787.07  \$75.74    \$3,711.33
3   \$3,767.49  \$75.35    \$3,692.14
4   \$3,748.02  \$74.96    \$3,673.05
5   \$3,728.64  \$74.57    \$3,654.07
6   \$3,709.36  \$74.19    \$3,635.18
7   \$3,690.19  \$73.80    \$3,616.38
8   \$3,671.11  \$73.42    \$3,597.69
9   \$3,652.13  \$73.04    \$3,579.09
10  \$3,633.25  \$72.67    \$3,560.59

After 936 payments (78 years) the balance will be \$29.32