Question: What is the formula to be applied to calculate the EMI of housing loan for different rests?
K.R. Narasimhan Chennai
Our panelist, T. M. Aaditiyaa, Chartered Accountant, replies:
The formula for calculation of EMI given the loan, term and interest rate is:
EMI = (p*r) (1+r)^n
(1+r)^n - 1
p = principal (amount of loan), r = rate of interest per instalment period, i.e., if interest is 12% p.a. r = 1, n = no. of instalments in the tenure, ^ denotes whole to the power. Alternatively, the reader can use `Calculate EMI function' in EXCEL spread sheet.
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