__Retail Banking__

**CAIIB-RETAIL BANKING-LAST MINUTE REVISION-CASE STUDY : 7**Explanation :

Here, P = 50000

R = 18% = 18 % ÷ 12 = 0.015 monthly

T = 8 yrs = 96 months

EMI = P * R * [(1+R)^T/(1+R)^T-1)]

EMI = 50000 * 0.015 * 1.01596 ÷ (1.01596 – 1)

= 986

A person raised a house loan of Rs. 10 lac @ 12% roi repayable in 10 years.

Calculate EMI.

Explanation :

Here, P = 1000000

R = 12% monthly = 0.01% p.a.

T = 10 Y = 120 months

EMI = P * R * [(1+R)^T/(1+R)^T-1)]

So,

EMI = 1000000*0.01*(1+0.01)^120 ÷ {(1+0.01)^120 – 1}

= 14347

If the sanctioned loan amount is Rs. 100000 at 12% interest for 2 years, Calculate the EMI.

Solution :

EMI= P x r x (1 + r)^n / ((1+r)^n -1)

Here p = principal amount (loan taken)

r = interest rate per month (ex: if interest rate per annum is 10% then 10/(12*100))

n= tenure in months

EMI = 100000*0.01*(1+0.01)^24 /((1+0.01)^24 -1) = 4707

Where, p = loan taken = 1,00,000

r = interest rate per month = 1% = 0.01

n = tenure in months = 2 Years = 24 months

Ajit wants to receive Rs. 40000 p.a. for 20 years by investing @ 5%. How much he will have to invest now?

Explanation :

Here, P = 40000

R = 5% p.a.

T = 20 yrs

PV = P / R * [(1+R)^T - 1]/(1+R)^T

PV = (40000 ÷ 0.05) * {(1.0520 – 1) ÷ 1.0520}

= 498489