A man takes a personal loan worth Rs.3,00,000 at an interest rate of 6% per annum compounded monthly to be repaid by equal monthly installments in 3 years, then the EMI using flat rate method will be:-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 9,833.33
In the flat rate method, simple interest is charged on the full principal for the whole loan period. So the words “compounded monthly” play no part here.
\(I = P \times r \times t = 3{,}00{,}000 \times 0.06 \times 3 = 54{,}000\)
\(\text{Total to repay} = 3{,}00{,}000 + 54{,}000 = 3{,}54{,}000\)
The loan is repaid in \(3 \times 12 = 36\) equal monthly instalments:
\( \displaystyle \text{EMI} = \frac{P + I}{n} = \frac{3{,}54{,}000}{36} = 9{,}833.33 \)
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
