Question 1

What is EMI?

Accepted Answer

EMI stands for Equated Monthly Installment. It is a fixed payment amount made by a borrower to a lender at a specified date each month. EMIs are used to pay off both interest and principal each month.

Question 2

How is EMI calculated?

Accepted Answer

EMI is calculated using the formula: EMI = P × r × (1 + r)^n / ((1 + r)^n - 1), where P is the principal loan amount, r is the monthly interest rate, and n is the number of monthly installments.

Question 3

What factors affect EMI amount?

Accepted Answer

EMI amount is affected by three main factors: the principal loan amount, the interest rate, and the loan tenure. Higher loan amounts and interest rates increase EMI, while longer tenure reduces EMI but increases total interest paid.

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