Question

A person takes a home loan of ₹1200000 from a bank at an interest rate of 12% per annum for 10 years. The EMI under flat rate system is.

• A. ₹22000
• B. ₹21000
• C. ₹20500
• D. ₹22500

Answer 1

The Correct Option is A

A flat rate system calculates interest on the initial principal amount throughout the loan tenure. Here's the solution for the EMI under a flat rate system:

Step 1: Calculate Total Interest

Principal (P): ₹1200000

Rate of Interest (R): 12% per annum

Time Period (T): 10 years

Interest is given by the formula:

$I=P\times R\times T/100$

Plug in the values:

$I=1200000\times 12\times 10/100=1440000$

Step 2: Calculate Total Amount to be Repaid

Total Amount = Principal + Total Interest

$A=1200000+1440000=2640000$

Step 3: Calculate Monthly EMI

EMI is total amount divided by number of months.

$\mathrm{EMI}=2640000/(10\times 12)=22000$

Therefore, the EMI under the flat rate system is ₹22000.