Shanky takes a loan ₹4,00,000 at an interest of 6% p.a. for 10 years. He wants to pay back in equal monthly installments. What in his EMI in ₹ amount when calculated by reduced balanced method ? $\left(use \frac{0.005}{1-(1.005)^{-120}}=0.0111\right)$
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 4440
The equated monthly installment (EMI) is,
$EMI=\frac{P×r×(1+r)^n}{(1+r)^n-1}$
$=\frac{400000×0.005×(1+0.005)^{120}}{(1+0.005)^{120}-1}$
$≃4,400$