Ravi borrowed Rs. 15,00,000 from a bank to purchase a plot and decided to repay the loan in equal monthly installments (EMI) in 10 years. If bank charges interest at 10% per annum, then EMI using a flat rate method is
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 25,000
In the flat rate method the interest is simple interest on the whole principal for the whole period:
\( \displaystyle \text{Interest}=15{,}00{,}000\times\frac{10}{100}\times10 \)
\( \displaystyle =\text{Rs. }15{,}00{,}000 \)
\( \displaystyle \text{Total amount}=15{,}00{,}000+15{,}00{,}000 \)
\( \displaystyle =\text{Rs. }30{,}00{,}000 \)
The number of instalments is \( 10\times12=120 \), so
\( \displaystyle \text{EMI}=\frac{30{,}00{,}000}{120} \)
\( \displaystyle =\text{Rs. }25{,}000 \)
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
