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EMI, CAGR & Depreciation · Question 6 of 66

How much interest does Mira pay in all on the dealer's flat-rate loan?

Question 6

EasyOriginal question

Mira wants a ₹5,00,000 car loan for 3 years, repaid in 36 equal monthly instalments. A dealer offers 8% a year at a flat rate; a bank offers 12% a year on the reducing balance, that is 1% a month. (Take (1.01)36=1.4308(1.01)^{36} = 1.4308.)

How much interest does Mira pay in all on the dealer's flat-rate loan?

Options for question 6

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Flat interest is charged on the full sum for the whole term.

  2. 5,00,000×0.08×3=1,20,0005{,}00{,}000 \times 0.08 \times 3 = 1{,}20{,}000 rupees.

Worth noting

₹40,000 is one year's interest; the loan runs for 3.

Concept
Interest at a flat rate
Typical time
90 s
Your time
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The rule this testsEMI by the flat-rate method
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