Assertion (A): With reducing-balance EMIs, the interest part of each instalment falls over the life of the loan.
Reason (R): Interest is charged only on the balance still owed, which falls after every EMI.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

R describes the reducing-balance method. True.
A smaller balance means less interest each month, and since the EMI is fixed, more of it repays the loan: A is true because of R.

Concept: How an EMI splits over time
Typical timeTypical: 90 s
Your timeYours: —

The rule this testsEMI by the reducing-balance method

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

Assertion (A): With reducing-balance EMIs, the interest part of each instalment falls over the life of the loan.Reason (R): Interest is charged only on the balance still owed, which falls after every EMI.

Explanation

Assertion (A): With reducing-balance EMIs, the interest part of each instalment falls over the life of the loan.
Reason (R): Interest is charged only on the balance still owed, which falls after every EMI.