Final answer:
The time to pay off a loan with monthly payments is calculated by dividing the total loan amount by the monthly payment.
Step-by-step explanation:
The question pertains to solving for the length of time required to pay off a loan with consistent monthly payments. Carrie borrows money and agrees to repay at a rate of $150 monthly. To determine the duration of the loan payoff, we use the loan payoff formula. As the loan is interest-free, the calculation simplifies to dividing the total loan amount by the monthly payment amount.
For example, if Carrie borrowed $1,500 interest-free, she would repay the loan over 10 months ($1,500 ÷ $150 per month).
In contrast, loans that accrue interest, such as a car loan or student loan with specified interest rates, require a different approach. The monthly payment required to pay off these loans involves calculating the total interest over the life of the loan plus the principal amount, then dividing by the loan term. Monthly payment examples provided in the reference materials help illustrate typical calculations for interest-accumulating loans.