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EMI, CAGR & Depreciation · Question 7 of 66

What is Mira's monthly instalment on the dealer's flat-rate loan?

Question 7

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.)

What is Mira's monthly instalment on the dealer's flat-rate loan?

Options for question 7

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. She repays 5,00,000+1,20,000=6,20,0005{,}00{,}000 + 1{,}20{,}000 = 6{,}20{,}000 in all.

  2. 6,20,00036≈17,222.22\frac{6{,}20{,}000}{36} \approx 17{,}222.22 rupees.

Worth noting

₹13,888.89 repays the loan with no interest at all.

Concept
A flat-rate instalment
Typical time
90 s
Your time
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The rule this testsEMI by the flat-rate method
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