Mameesh took a loan of ₹9,00,800 from bank at an interest rate of 6% per annum for 10 years. If she has to pay the loan back with the help of equal monthly installments (EMI). Then, the EMI using reduced balance method is (approx):

(Given: $(1.005)^{-120}=0.5496$)

₹10,000

The correct answer is Option (3) → ₹10,000 **

Principal $P = 900800$

Annual interest rate = $6\%$

Monthly rate = $\frac{6}{12} = 0.5\% = 0.005$

Loan period = 10 years = 120 months

EMI formula (reducing balance):

$\displaystyle \text{EMI} = P \cdot \frac{r(1+r)^n}{(1+r)^n - 1}$

Here $r=0.005,\;n=120$.

Substitute values:

$\text{EMI} = 900800 \cdot \frac{0.005 \cdot 1.819}{1.819 - 1}$

EMI = $\displaystyle \frac{8184.27}{0.819} \approx 9990$

Approx EMI ≈ ₹10,000 per month