Mr. X wishes to purchase a house for ₹14,51,400 from a bank and decided to repay the loan by equal monthly installments (EMI) in 10 years. If bank charges interest at 9 % per annum compounded monthly, then the EMI is:
[Given that $(1.0075)^{120}=2.4514$]
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹18385.50
Loan amount:
$P = 1451400$
Monthly interest rate:
$r = \frac{0.09}{12} = 0.0075$
Total number of months:
$n = 10\times 12 = 120$
EMI formula:
$\displaystyle EMI = P\frac{r(1+r)^{n}}{(1+r)^{n}-1}$
$\displaystyle EMI = 1451400 \times \frac{0.0075 \times 2.454}{2.454 - 1}$
$= 1451400 \times \frac{0.018405}{1.454}$
$= 1451400 \times 0.01266$
$\approx 18378$
EMI = ₹18,378 (approximately)