Question

Sanjay takes a personal loan of ₹6,00,000 at the rate of 12% per annum for 'n' years. The EMI using the flat rate method is ₹16,000. The value of 'n' is:

• A. 3
• B. 6
• C. 5
• D. 4

Answer 1

The Correct Option is C

Using the flat rate method, the total interest is calculated as:

Interest = \(P \times r \times n\),

where \(P = 6,00,000\), \(r = 0.12\), and \(n\) is the duration in years.

The total repayment is:

Total Repayment = \(P + \text{Interest} = 6,00,000 + (6,00,000 \times 0.12 \times n)\).

The EMI is given by:

\(\text{EMI} = \frac{\text{Total Repayment}}{n \times 12}\).

Substitute the given EMI value:

16,000 = \(\frac{6,00,000 + (6,00,000 \times 0.12 \times n)}{n \times 12}\).

Simplify:

\(16,000 \times n \times 12 = 6,00,000 + (6,00,000 \times 0.12 \times n)\).

\(1,92,000n = 6,00,000 + 72,000n\).

\(1,20,000n = 6,00,000 \implies n = 5\).

Thus, the correct answer is 5.