Question 1

What is EMI?

Accepted Answer

EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each calendar 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 x R x (1+R)^N]/[(1+R)^N-1], where P is the loan amount, R is the monthly interest rate, and N is the loan tenure in months.

Question 3

What factors affect EMI?

Accepted Answer

Three main factors affect EMI: 1) Loan Amount (Principal), 2) Interest Rate, and 3) Loan Tenure. Higher loan amount or interest rate increases EMI, while longer tenure reduces monthly EMI but increases total interest.

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