Harish takes a loan of Rs. 6,00,000 at an interest of 10% per annum compounded annually for a period of 5 years. His EMI using a flat rate method is:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 15,000
In the flat rate method, interest is charged as simple interest on the original principal for the whole period, and the total is repaid in equal monthly instalments. So the words “compounded annually” do not enter the calculation.
\( \text{Interest}=P\times r\times t \)
\( \displaystyle =6{,}00{,}000\times\frac{10}{100}\times 5 \)
\( =3{,}00{,}000 \)
\( \text{Total amount}=6{,}00{,}000+3{,}00{,}000=9{,}00{,}000 \)
\( \text{Number of instalments}=5\times 12=60 \)
\( \displaystyle \text{EMI}=\frac{9{,}00{,}000}{60}=\text{Rs. }15{,}000 \)
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
