Suresh takes a loan of Rs. 4,00,000 with 10% annual interest rate for 5 years on flat rate basis. Which of the following statements are correct?
A. The total interest on the principal is Rs. 1,00,000.
B. The number of months in loan period is 60.
C. EMI under flat rate system is Rs. 12,000.
D. EMI under flat rate system is Rs. 10,000.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → B and D only
In the flat rate method the interest is simple interest on the original principal for the whole period.
\( \displaystyle \text{Interest}=4{,}00{,}000\times\frac{10}{100}\times5 \)
\( \displaystyle =2{,}00{,}000 \)
\( \displaystyle \text{Total amount}=4{,}00{,}000+2{,}00{,}000 \)
\( \displaystyle =6{,}00{,}000 \)
The number of instalments is \( 5\times12=60 \), so
\( \displaystyle \text{EMI}=\frac{6{,}00{,}000}{60} \)
\( \displaystyle =\text{Rs. }10{,}000 \)
So the total interest is Rs. 2,00,000, the loan period is 60 months and the EMI is Rs. 10,000.
Checking the statements
(A) The total interest on the principal is Rs. 1,00,000 — Incorrect. The total interest is Rs. 2,00,000.
(B) The number of months in loan period is 60 — Correct. 5 years = 60 months.
(C) EMI under flat rate system is Rs. 12,000 — Incorrect. The EMI is Rs. 10,000.
(D) EMI under flat rate system is Rs. 10,000 — Correct. Rs. 6,00,000 shared over 60 months is Rs. 10,000.
CBSE Applied Mathematics (Class XII):
Methods of Calculation of EMI or Instalment
