Statistics & Applications

Financial Math

Medium

applied

Vatsala buys a car for Rs.7,00,000 and pays upfront Rs.2,50,000 through her credit card. The balance is to be paid in 5 years by equal monthly installments at an interest of 7% per annum as reducing balance. The EMI to be paid by Vatsala will be :- [given (1.0058)⁻⁶⁰=0.7068]

Rs. 3692.7

Rs.13,847.2

Rs. 5,744.2

Rs. 8901.7

✅ Correct Option: 4

Vatsala buys a car worth Rs. 7,00,000 and pays Rs. 2,50,000 upfront. The remaining amount is financed as a loan, repaid through equal monthly installments (EMI) over 5 years at 7% p.a. on a reducing balance basis.

$P = \text{Total Price} - \text{Upfront Payment}$

$P = 7,00,000 - 2,50,000$

$P = \text{Rs. } 4,50,000$

From the given information:

$P = \text{Rs. } 4,50,000$

$r = \dfrac{7\%}{12} = 0.0058$

$n = 5 \times 12 = 60 \text{ months}$

Using the EMI formula:

$EMI = \dfrac{P \times r}{1 - (1 + r)^{-n}}$

$EMI = \dfrac{4,50,000 \times 0.0058}{1 - (1.0058)^{-60}}$

Numerator $= 4,50,000 \times 0.0058 = 2,610$

Denominator $= 1 - (1.0058)^{-60}$

$= 1 - 0.7068$

$= 0.2932$

$EMI = \dfrac{2,610}{0.2932}$

$EMI \approx \text{Rs. } 8,901.7$

2024: 16 May Shift 1

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2025: 30 May Shift 2

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2025: 14 May Shift 1

Which of the following are correct about the Sinking Fund?

(A) It is a fixed term account.

(B) It is a set-up for a particular upcoming expense.

(D) It can be used in any emergency.

Choose the correct answer from the options given below:

2025: 21 May Shift 2

A motorcycle has a scrap value of Rs. 22,500 after 15 years of its purchase. If the annual depreciation charge is Rs. 8,500, then the original cost by linear method is:

2025: 21 May Shift 1

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2025: 30 May Shift 1

A piece of machinery is bought for Rs. 50,000. In the first year, it depreciates by 15%, and in each subsequent year, the depreciation rate increases by 5% from the previous year. The value of machinery after 3 years will be:

Vatsala buys a car for Rs.7,00,000 and pays upfront Rs.2,50,000 through her credit card. The balance is to be paid in 5 years by equal monthly installments at an interest of 7% per annum as reducing balance. The EMI to be paid by Vatsala will be :- [given (1.0058)⁻⁶⁰=0.7068]

Solution

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