You are going to borrow $500,000 to buy a house. assume an annual interest rate of 8%. the length of the loan is 30 years and you are making payments at the end of each month. your monthly payment is

The monthly payments will be approximately $4722.16

Explanation:

loan amount: $500000

annual interest on loan: 8%

loan duration: 30 years

To get the annual interest to be paid on loan will be

8% of $500000 = 0.08 * $500000 = $40000

therefore the total interest to be paid in 30 years will be

$40000 * 30 years = $1200000

The total amount of loan to be paid in 30 years will then be

loan amount + total interest = $500000 + $1200000 = $1700000

making monthly payment this total amount to be paid over 30 years will be

Yearly payment

$1700000 ÷ 30 years ≈ $56666

Monthly payment

$56666 ÷ 12 months in a year ≈ $4722.16

answer; is usually (less than) the socially optimal level of consumption;