Statistics & Applications

Financial Math

Medium

applied

Chintan has borrowed ₹ 5,00,000 from a bank to purchase a car and decided to repay the loan in equal monthly installments in 10 years. If bank charges interest at 6% per annum compounded monthly, the EMI on reducing balance method will be : (Given $(1.005)^{120} = 1.82$ )

₹ 5500

₹ 5878.48

₹ 5548.78

₹ 5458.47

✅ Correct Option: 3

Here $i = \dfrac{0.06}{12} = 0.005$ and $n = 120$ .

EMI $= \dfrac{Pi(1+i)^n}{(1+i)^n-1} = \dfrac{500000\times0.005\times1.82}{1.82-1}$ .

This is $\dfrac{4550}{0.82} \approx ₹5548.78$ .

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Solution