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A man takes a personal loan worth Rs.3,00,000 at an interest rate of 6% per annum compounded monthly to be repaid by equal monthly installments in 3 years, then the EMI using flat rate method will be:-

Solution

✅ Correct Option: 1

Given:

  • Loan Amount (Principal) = Rs. 3,00,000
  • Interest Rate = 6% per annum
  • Time Period = 3 years
  • Method = Flat Rate Method

In flat rate method, simple interest is calculated on the original loan amount for the entire period.


Calculate Simple Interest using: SI = (P × R × T) / 100

SI = (3,00,000 × 6 × 3) / 100

SI = 54,00,000 / 100

SI = Rs. 54,000


Total Amount to be repaid:

Total Amount = Principal + Simple Interest

Total Amount = 3,00,000 + 54,000

Total Amount = Rs. 3,54,000


Number of monthly installments:

Number of months = 3 × 12

Number of months = 36 months


Calculate EMI:

EMI = Total Amount / Number of Months

EMI = 3,54,000 / 36

EMI = Rs. 9,833.33

Therefore, the EMI using flat rate method is Rs. 9,833.33.

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