Question

Alibaba borrows 6 lakhs Housing Loan at 6% repayable in 20 annual installments
commencing at the end of the first year. How much annual payment is necessary.
(a) 52,420
(b) 52,419
(c) 52,310
(d) 52,320​

Answer 1

Answer:

(c) 52,310  is necessary

Step-by-step explanation:

EAI = Equated Annual Installemnts

EAI = P  * (R/100) * (1 + R/100)ⁿ  / ((1 + R/100)ⁿ  - 1)

P = Loan Amount = 600000

R = Rate of interest Annualy = 6

N = Number of Years = 20

3.2071354722128447318829929845779‬

EAI = 600000 * (6/100) * ( 1 + 6/100)²⁰/ (( 1 + 6/100)²⁰ - 1)

=> Annual installments =   36000 (1.06)²⁰ /( (1.06)²⁰ - 1)

=> Annual installments =  36000 * 3.207 / 2.207

=> Annual installments = 52311

(c) 52,310  is necessary

Answer 2

Step-by-step explanation:

present value of an annuity = 600000

n=20

i= .o6

A = V ÷ p(n,i)

p(20,.06) = 11.4697

A = 600000 ÷ 11.4697

= 52310