ECONOMICS
COMPOUND INTEREST
Question
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$5, 652.40


$2, 260.96


$565.42


$565.24

Detailed explanation1: Equated Monthly Installment (EMI) Formula The EMI flatrate formula is calculated by adding together the principal loan amount and the interest on the principal and dividing the result by the number of periods multiplied by the number of months.
Detailed explanation2: The important thing to note for Home Loan interest rate is that it is compounded interest and not simple interest. In other words, you don’t pay interest only on the principal amount, but you pay interest on the principal amount plus the interest accrued.
Detailed explanation3: Here’s the formula for calculating compound interest: CI = P (1+r/n) ^nt – P. To solve, plug the described information into the designated spots. Then divide the rate (r) by the number of times compounded (n) and add it to one.
Detailed explanation4: If you were to look at how the EMI is calculated on loans then you cannot divide it into simple interest rate and compound interest. The reason for this is that you as the borrower do not have to deal with the aspects of simple interest or compound interest.