A loan of ₹50,000 is to be repaid in 3 equal annual instalments at 10% per annum. Find the annual instalment (

Worked Examples · Example 12

Q. A loan of ₹50,000 is to be repaid in 3 equal annual instalments at 10% per annum. Find the annual instalment (EMI). [Given (1.1)^3 = 1.331]

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The loan principal $P=₹50{,}000$ equals the present value of the three instalments, so use the EMI formula with $i=0.10$ , $n=3$ :

\text{EMI}=P\left[\frac{i(1+i)^{n}}{(1+i)^{n}-1}\right]=50000\left[\frac{0.1\times(1.1)^{3}}{(1.1)^{3}-1}\right]=50000\left[\frac{0.1\times1.331}{1.331-1}\right]=50000\times\frac{0.1331}{0.331}.

$\text{EMI}=\frac{6655}{0.331}\approx ₹20{,}105.74.$ …

Q.A loan of ₹50,000 is to be repaid in 3 equal annual instalments at 10% per annum. Find the annual instalment (EMI). [Given (1.1)^3 = 1.331]