A loan of ₹1,20,000 is taken at a flat rate of 10% a year for 2 years, to be repaid in equal monthly instalments. What is the EMI?

Explanation

1. 01

   Flat-rate interest is charged on the whole loan for the whole term: $1{,}20{,}000 \times 0.10 \times 2 = 24{,}000$.

2. 02

   EMI $= \frac{1{,}20{,}000 + 24{,}000}{24} = 6{,}000$ rupees.