Consider a credit card with a balance of $8000
 and an APR of 12.5%
. If you want to make monthly payments in order to pay off the balance in 2
 years, what is the total amount you will pay? Round your answer to the nearest cent, if necessary

To solve this, we need to calculate the monthly payment required to pay off the balance and then find the total amount paid over the two-year period.

We can use the formula for calculating monthly payments on a loan or credit card balance:

\[
M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}
\]

Where:
- $ M $ is the monthly payment,
- $ P $ is the principal (the balance, $ 8000 $),
- $ r $ is the monthly interest rate (the annual interest rate divided by 12),
- $ n $ is the number of payments (12 months $\times$ 2 years = 24 months).

### Step 1: Convert the APR to a monthly interest rate
The APR is 12.5%, so the monthly interest rate $ r $ is:

\[
r = \frac{12.5\%}{12} = \frac{0.125}{12} = 0.010417
\]

### Step 2: Calculate the number of monthly payments
The number of payments is $ n = 2 \times 12 = 24 $ months.

### Step 3: Use the formula to calculate the monthly payment
Substitute the values into the formula:

\[
M = \frac{8000 \cdot 0.010417 \cdot (1 + 0.010417)^{24}}{(1 + 0.010417)^{24} - 1}
\]

Now we can calculate the monthly payment $ M $.

---

Using the above formula:

\[
M = \frac{8000 \cdot 0.010417 \cdot (1.010417)^{24}}{(1.010417)^{24} - 1}
\]

Calculating each part:

- $ (1.010417)^{24} = 1.282037 $
- The numerator becomes: $ 8000 \times 0.010417 \times 1.282037 = 106.786 $
- The denominator becomes: $ 1.282037 - 1 = 0.282037 $

Thus, the monthly payment is:

\[
M = \frac{106.786}{0.282037} \approx 378.62
\]

### Step 4: Calculate the total amount paid
Now, multiply the monthly payment by the total number of months:

\[
\text{Total amount paid} = 378.62 \times 24 = 9,086.88
\]

### Final Answer:
The total amount paid over 2 years will be approximately **$9,086.88**.

---

Would you like more details on the calculations or any further explanations?

Here are 5 related questions:
1. How does the monthly payment change if the APR increases to 15%?
2. What is the total interest paid over the 2 years?
3. How would the total amount change if the balance was $10,000 instead of $8,000?
4. What happens to the monthly payment if the repayment period is extended to 3 years?
5. How can you pay off the balance faster with the same interest rate?

**Tip:** To minimize interest costs, try to pay more than the minimum payment when possible.

Consider a credit card with a balance of $8000 and an APR of 12.5%. If you want to make monthly payments in order to pay off the balance in 2 years, what is the total amount you will pay? Round your answer to the nearest cent, if necessary.

Learn how to calculate the total payment for a credit card balance of $8000 with an APR of 12.5% over a 2-year period. This problem involves financial concepts like loan amortization, compound interest, and the monthly payment formula, suitable for Grades 10-12.

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