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
Given:
Principal: $P = 3,00,000$
Rate of interest: $r = 6\%$ per annum → flat rate monthly interest = $\frac{6}{12} = 0.5\%$ per month
Tenure: $n = 3$ years = 36 months
Flat rate interest = $P \times r \times t = 3,00,000 \times 0.06 \times 3 = 54,000$
Total amount to be repaid = Principal + Interest = 3,00,000 + 54,000 = 3,54,000
EMI = $\frac{\text{Total amount}}{n} = \frac{3,54,000}{36} = 9,833.33$