Question

Using flat rate method, the EMI to repay a loan of ₹ 20,000 in \( 2 \frac{1}{2} \) years at an interest rate of 8% p.a. is:

• A. ₹ 700
• B. ₹ 800
• C. ₹ 900
• D. ₹ 1000

Hint:

For flat-rate EMI calculation, use \( {Interest} = P \cdot r \cdot t \) and divide the total repayment by the number of months.

Answer 1

The Correct Option is B

Step 1: Calculate the total interest: \[ {Total Interest} = P \cdot r \cdot t = 20000 \cdot 0.08 \cdot 2.5 = 4000. \] Step 2: Total amount to be repaid: \[ {Total Amount} = 20000 + 4000 = 24000. \] Step 3: EMI calculation: \[ {Total Months} = 2.5 \times 12 = 30. \] \[ {EMI} = \frac{{Total Amount}}{{Total Months}} = \frac{24000}{30} = 800 \, {per month}. \]