After getting a new job, Alok took a car loan of Rs. 5,00,000 at an interest of 10% annually for a period of 5 years. His EMI using a flat rate method is
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 12,500
In the flat rate method, interest is charged on the full principal for the whole period:
\( \displaystyle I=P\times r\times n \)
\( \displaystyle =500000\times 0.10\times 5 \)
\( \displaystyle =\text{Rs. }2{,}50{,}000 \)
The total amount P + I is repaid in 5 × 12 = 60 equal monthly instalments:
\( \displaystyle \text{EMI}=\frac{P+I}{12n} \)
\( \displaystyle =\frac{500000+250000}{60} \)
\( \displaystyle =\frac{750000}{60} \)
\( \displaystyle =\text{Rs. }12{,}500 \)
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
