Question 15 Marks
A person amortizes a loan of ₹ 1500000 for renovation of his house by 8 years mortgage at the rate of $12 \%$ p.a. compounded monthly. Find
i. the equated monthly installment
ii. the principal outstanding at the beginning of 40th month.
iii. the interest paid in $40^{\text {th }}$ payment.
$
\text { [Given } \left.(1.01)^{96}=2.5993,(1.01)^{57}=1.7633\right]
$
i. the equated monthly installment
ii. the principal outstanding at the beginning of 40th month.
iii. the interest paid in $40^{\text {th }}$ payment.
$
\text { [Given } \left.(1.01)^{96}=2.5993,(1.01)^{57}=1.7633\right]
$
Answer
View full question & answer→Given, $\mathrm{P}=$ ₹ $1500000, \mathrm{i}=\frac{12}{12 \times 100}=\frac{1}{100}=0.01$
and $\mathrm{n}=8 \times 12=96$
$\begin{array}{l}\text { i. } EMI =\frac{1500000 \times 0.01 \times(1.01)^{96}}{(1.01)^{96}-1} \\ =\frac{1500000 \times 0.01 \times 2.5993}{2.5993-1} \\ =\frac{1500000 \times 0.01 \times 2.5993}{1.5993}\end{array}$
= ₹ 24379.10
ii. Principal outstanding at the beginning of $40^{\text {th }}$ month
$\begin{array}{l}=\frac{E M I\left[(1+i)^{96-40+1}-1\right]}{i(1+i)^{96-40+1}} \\ =\frac{24379.10 \times\left[(1.01)^{57}-1\right]}{0.01(1.01)^{57}} \\ =\frac{24379.10 \times(1.7633-1)}{0.01 \times 1.7633} \\ =\frac{24379.10 \times 0.7633}{0.017633}\end{array}$
= ₹ 1,055,326.20
iii. Interest paid in $40^{\text {th }}$ payment
$
\begin{aligned}
& =\frac{E M I\left[(1+i)^{96-40+1}-1\right]}{(1+i)^{96-40+1}} \\
& =\frac{24379.10\left[(1.01)^{57}-1\right]}{(1.01)^{57}}
\end{aligned}
$
$
\begin{aligned}
& =\frac{24379.10 \times 0.7633}{1.7633} \\
& \end{aligned}$
= ₹ 10553.26
and $\mathrm{n}=8 \times 12=96$
$\begin{array}{l}\text { i. } EMI =\frac{1500000 \times 0.01 \times(1.01)^{96}}{(1.01)^{96}-1} \\ =\frac{1500000 \times 0.01 \times 2.5993}{2.5993-1} \\ =\frac{1500000 \times 0.01 \times 2.5993}{1.5993}\end{array}$
= ₹ 24379.10
ii. Principal outstanding at the beginning of $40^{\text {th }}$ month
$\begin{array}{l}=\frac{E M I\left[(1+i)^{96-40+1}-1\right]}{i(1+i)^{96-40+1}} \\ =\frac{24379.10 \times\left[(1.01)^{57}-1\right]}{0.01(1.01)^{57}} \\ =\frac{24379.10 \times(1.7633-1)}{0.01 \times 1.7633} \\ =\frac{24379.10 \times 0.7633}{0.017633}\end{array}$
= ₹ 1,055,326.20
iii. Interest paid in $40^{\text {th }}$ payment
$
\begin{aligned}
& =\frac{E M I\left[(1+i)^{96-40+1}-1\right]}{(1+i)^{96-40+1}} \\
& =\frac{24379.10\left[(1.01)^{57}-1\right]}{(1.01)^{57}}
\end{aligned}
$
$
\begin{aligned}
& =\frac{24379.10 \times 0.7633}{1.7633} \\
& \end{aligned}$
= ₹ 10553.26


