A person buys a flat for which he makes down payment of ₹7,50,000 and the balance is to be paid in 10 years by monthly instalments of ₹22,000 each. If the bank charges interest at the rate of 12% per annum, then the actual price of the flat using flat rate system is :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) - ₹19,50,000
$\text{Monthly EMI} = 22000,\;\; n = 120$
$\text{Total paid in instalments} = 22000 \times 120 = 2640000$
$\text{Flat rate interest } = P \cdot r \cdot t$
$2640000 = P + (P \cdot 0.12 \cdot 10)$
$2640000 = P(1 + 1.2) = 2.2P$
$P = \frac{2640000}{2.2} = 1200000$
$\text{Total price} = \text{Down payment} + P$
$= 750000 + 1200000 = 1950000$
The actual price of the flat is ₹19,50,000.