A takes a loan of ₹5,00,000 at an interest rate for 5 years. The EMI paid by him is ₹10,000. The effective interest rate for A is : (Under flat rate system)

4%

Loan amount $=500000$.

EMI $=10000$ per month.

Time $=5$ years $=60$ months.

Total amount paid:

$=10000\times60=600000$

Total interest paid:

$=600000-500000=100000$

Under flat rate system, effective interest rate:

$=\frac{\text{Total Interest}}{\text{Principal}\times\text{Time}}$

$=\frac{100000}{500000\times5}$

$=\frac{100000}{2500000}=0.04$

$=4\%$ per annum.

final answer: $4\%$ per annum