Anush takes a loan of Rs. 150000 @ 16% annual interest for 5 years. His EMI (Equally Monthly Installment) on monthly basis under flat rate system is:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 4500
Under the flat rate system, interest is charged on the full principal for the whole period:
\( \displaystyle \text{Interest} = \frac{150000 \times 16 \times 5}{100} = 120000 \)
\(\text{Total amount} = 150000 + 120000 = 270000\)
\(\text{Number of instalments} = 5 \times 12 = 60\)
\( \displaystyle \text{EMI} = \frac{270000}{60} = 4500 \)
So the EMI is Rs. 4500.