A loan of ₹1,00,000 is to be repaid in 12 monthly instalments by the reducing-balance method, at 12% a year compounded monthly. To the nearest rupee, what is the EMI? (Take $(1.01)^{12} = 1.1268$ .)

₹1,127Correct answerYour answer₹8,333Correct answerYour answer₹8,886Correct answerYour answer₹9,333Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Monthly rate $i = 0.01$ , $n = 12$ : $E = \frac{1{,}00{,}000 \times 0.01 \times 1.1268}{0.1268}$ .
$E = \frac{1{,}126.8}{0.1268} \approx 8{,}886$ rupees.

Worth noting

₹9,333 is the flat-rate EMI, $\frac{1{,}12{,}000}{12}$ , which charges interest on the whole loan all year.

Ten questions from EMI, CAGR & Depreciation, at your own pace.

A loan of ₹1,00,000 is to be repaid in 12 monthly instalments by the reducing-balance method, at 12% a year compounded monthly. To the nearest rupee, what is the EMI? (Take (1.01)12=1.1268(1.01)^{12} = 1.1268(1.01)12=1.1268.)