Let \(P, I\) and \(n\) be the principal of the loan, the total interest on the principal and number of months in the loan period respectively, then the EMI by Flat Rate Method is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → \(\displaystyle\frac{P+I}{n}\)
In the flat rate method, interest is charged on the full principal for the whole loan period. The principal and this total interest are then repaid in n equal monthly instalments.
\(\text{Total amount repaid} = P + I\)
\( \displaystyle \text{EMI} = \frac{P + I}{n} \)
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
