alleryIf a loan of Rs.50000 is to be repaid in 5 equal annual instalments at 10% per annum, each instalment equals approximately
ARs.13190
BRs.15000
CRs.10000
DRs.12000
Answer & Solution
Correct answer: A. Rs.13190
1. EMI = P * r / (1 - (1 + r)^-n).
2. Annuity factor = (1 - (1.10)^-5)/0.10 = (1 - 0.6209)/0.10 = 3.791.
3. Instalment = 50000 / 3.791 = 13190.
4. So each annual instalment is approximately Rs.13190.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.15_
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