Also advise Mr

Finance Jan 15, 2021

Also advise Mr. X that if he borrows from Bank an amount of Rs. 12,00.000 @ 10% p.a. on 1-4- 2020. The repayment is to be made in 6 equal annual installment starting from three years from now. What would be the amount of each installment?

Expert Solution

The amount of loan value at the end of 2 years = Current loan x (1 + r)² = 12,00,000 x (1 + 10%)²= 14,52,000

Hence, the amount of each installment = PMT (Rate, Nper, PV, FV) = PMT (10%, 6, -1452000, 0) = 333,389.92

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