Ram wishes to purchase a house for Rs. 15,00,000 and made a down payment of Rs. 5,00,000. If he can amortize the balance at 9% per annum compounded monthly for 25 years, then his EMI is: [Given \((1.0075)^{300} = 9.41\)]
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 8391.80
The loan is the balance after the down payment:
\(P = 1500000 - 500000 = 1000000\)
The rate per month is \(i = \frac{9}{12}\% = 0.0075\), and the number of monthly payments is \(n = 25 \times 12 = 300\). By the EMI formula (reducing balance):
\( \displaystyle \text{EMI} = \frac{P\,i\,(1 + i)^n}{(1 + i)^n - 1} \)
\( \displaystyle \text{EMI} = \frac{1000000 \times 0.0075 \times 9.41}{9.41 - 1} \)
\( \displaystyle \text{EMI} = \frac{70575}{8.41} \approx 8391.80 \)
So the EMI is Rs. 8391.80.