Question

What is the EMI of loan of Rs. 55,000 if repaid in 5 years at the rate of 5% p.a on the outstanding amount of the beginning of each year.

Answer 1

In order to determine the EMI of loan of Rs 55,000, use the following formula:

`A=P(1+(r)/(100))^n`

where,

r: interest rate = 5%

P = 55,000

n: 5

Replace the previous values of the parameters into the formula for P:

`\begin{gathered} A=55,000(1+(5)/(100))^5 \\ A=55,000(1+0.05)^5 \\ A=55,000(1.05)^5 \\ A\approx70,195.48 \end{gathered}`

Hence, the EMI of loan is approximately Rs. 70,195.48