Sr No.

Kaushik has taken a home loan of Rs.9.5% pa for 10 years. He wants to know the
Q1
effective interest he is paying to Bank.2%

A) 8.89%
B) 9.72%
C) 10.11%
D) None of the above

ANSWER: None of the above

9.92%

Kavita wants to buy a car whose price on road is Rs 4,50,000/-. (this includes 10%
add up on the Ex- Showroom price). A bank is willing to finance 80% of the ex-
Q2 showroom value of the car for 3 years at an interest rate of 11.50% pa. Kavita
wants to know if she takes the loan and repay the same is 36 EMI’s,. how much
interest will she have to pay in all. According to you the same is approximately

A) 388,517
B) 61,245
C) 53,213
D) None of the above

ANSWER: 61245

always assumed loan is paid at end of the month unless given in question
 

Rajiv has taken a home loan at flexible interest rate for 20 years for amount of
Rs.30 lac at 10% pa. After 2 years interest rate increased to 11% pa. He wants to
Q3
know how much EMI he has to increase if he doesn’t want to increase the tenure
of loan.

A) 30,838
B) 28,950
C) 31,951
 D) 21,340

ANSWER: 30838
step 1 EMI at the start of the loan
Loan amount
rate
nper
EMI
step 2 find the value of loan after 2 years
method1 fv ₹ -2,895,517.51
method2 cu -104482.489055226
step 3 find new emi
Rajiv has taken a home loan at flexible interest rate for 20 years for amount of
Rs.30 lac at 10% pa. After 2 years interest rate increased to 11% pa. He wants to
Q4
know by how many months his loan tenure will increase if he doesn’t want to
increase the EMI of loan.

A) 60 months
B) 59 months
C) 53 months
D) 56 months

ANSWER: 56 Months

 
Rajiv has taken a vehicle loan of Rs.4 lac for 7 years from a bank @11%pa. After
three years, he found interest rate in other bank are very competitative which is at
Q5 9.5%pa. There is a pre-penatly clause of 2% on principal outstanding. He wants to
know the effective re-financing cost of this vehicle. Note: No increase in tenure of
loan.

A) 8.79%
B) 11.07%
C) 10.54%
D) 12.61%

ANSWER: 11.07%
 Mr. A had taken a loan of Rs. 40 lakh in July 2010 at a floating rate of interest of
10% p.a for tenure of 20 years from a housing finance company. The company sent
a notice raising the interest rate to 10.75% p.a. effective January 2012 thereby
Q6 increasing EMI. He decides to refinance the loan at 10.25% from a bank which
charges a processing fee of 1% of loan sanctioned. What absolute amount he
stands to save in the remaining tenure if the outstanding loan amount as at end of
March 2012 is refinanced so that the new loan terminates as per original tenure?

A) Rs. 3,60,948
B) Rs. 1,92,266
C) Rs. 4,90,240
D) Rs. 2,39,401

Answer: Rs. 2,39,401

 Bunty and Babli want to understand the extent of co-relation between the gold
prices internationally and the gold prices in India. You opine that foreign exchange
fluctuations play a major role here. Interestingly the rise in Gold Prices
internationally is accompanied by weakening of dollar, thereby smoothening out to
a large extent Rupee price appreciation in Gold. Currently the price of gold per troy
Q7 ounce is US$1,113 and the price in India for the same quantity of Gold is Rs 1650
per gram. Curren1t exchange rate is 1US$ = INR 46.22.They presume a scenario
where the price of Gold after one year is US $ 1,250 per troy ounce but the US $
depreciates against the Rupee to the extent of 4.8%. They want to know what is
the percentage appreciation that happen in Rupee price as per the above situation
(Assume no other factor affects the price of Gold). (1 troy ounce = 31.1035 gram)

A) 7.17%
B) 6.93%
C) 7.51%
D) 12.31%.

ANSWER: 6.93%

Shane Taylor wants has informed that he has got an offer for a car loan from a
finance company. The value of the car that he wants to buy is Rs 15 Lacs. He will
make a down payment of Rs 7 Lacs to would avail the loan of the remaining
amount. The company charges 2% processing fees and an interest @ 10% pa for
the 45 month tenure on reducing monthly balance basis. Shane however pays only
Q8
Rs 7 Lacs up front and asks the company to cumulate (accumulate) the loan
amount to the extent of processing fees. The company does it so by ensuring that
it charges 2% processing fees on the total loan amount .Shane wants to know what
the rate of interest of the loan is (per month), the EMI is paid at the end of each
month.

A) 0.928%
B) 0.83%
C) 1.02%
D) 0.65%

ANSWER: 0.928%
 You are taking home loan of Rs.20 lac for 20 years at 12% p.a. What will be you
Q9
EMI?

A) 20000
B) 22021
C) 12007
D)13678

Answer: 22021

The cash purchase price of a car is Rs 2,00,000. A company, however, offers

installment plan where under an immediate payment of Rs 40,000 is to be made
Q10 and a series of 5 half-yearly payments made there after. The first installment is
payable after 6 months. If the company wishes to realize a rate of interest of 10%
convertible half yearly, calculate the half yearly installment.

A) 35196
B) 36955
C) 42207
D) 26039

ANSWER: 36955

Rohini wants to buy a Plasma TV, the cash purchase is Rs 1.5 lacs. The retailer
offers installment plan that allows an immediate payment of Rs 20,000 and a series
of 5 Half Yearly payments thereafter. The first installment is payable after one and
Q11
a half years. If the company wants the rate of interest to be 10% p.a. compounded
half yearly what will be the half yearly installment is?. (assume that installment
paid in the beginning)

A) Rs 34,760
B) Rs 38,197
C) 32,992
D) Rs 33,104

ANSWER: 33104
  

Ramesh has taken a home loan of Rs.15 lac @10.25%pa for tenure of 15 years. He
will get possession of flat after 2 years. He takes 20% of loan today. And 20% after
12
every 6 months from now. How much EMI he will pay after final disbursement of
amount? (Assume tenure of loan will start after final disbursement)

A) 16,349
B) 17,439
C) 15,321
ANSWER: 16349

Mihir wants to buy a car making a down payment of Rs 4 Lacs and taking Rs 8 Lacs
as loan for 5 years. A car financing firm ABC Ltd offers a flat rate of 6% p.a. and
processing fees of 2% recovered upfront. Another firm XYZ offers 10.25% p.a. on a
Q13 monthly reducing balance basis and adds processing fees of 1.5% in the loan
amount to be recovered in EMI’s over years. According to you which firms offer is
better for Mihir and what is the difference in terms of the total interest and
charges paid?

A) XYZ Ltd, Rs 26,789 lower

B) XYZ Ltd, Rs 30,227 Lower
C) XYZ Ltd Rs 24,728 Lower
D) both offers nearly match up.

ANSWER: XYZ Ltd, Rs 26789 lower

 
Saurav availed the housing loan of 20 lac at an interest rate of 9.5% p.a. (on
reducing monthly balance basis) on 1st December, 2005 for a term of 15 years. The
Q18 first EMI was paid on 1st January, 2006 and thereafter on 1st of every month.
Saurav wants to know by how much the EMI should be increased from 1st
December, 2007 if the entire loan is to be repaid by 1st December, 2012.
 A) 15,214
B) 17,950
C) 31,538
D) None of the above

ANSWER: 17950

Home equity question:Mr. A purchased a flat worth Rs. 50 lakh in January 2007 by
availing a housing loan of Rs. 35 lakh for tenure 15 years at the rate of 9% p.a. The
Q19 value of his flat as in January 2013 has appreciated to Rs. 90 lakh. What
approximate value of home equity can he consider in his flat towards his
unencumbered interest after also setting aside 15% of the appreciation value
towards taxes and other costs to be discharged on selling the unit?

A) 55.00 lac
B) 57.78 lac
C) 87.87 lac
D) None of the above

ANSWER: 57.78 lac

 
 Namrata wants to go abroad on a family vacation tour. A professional tour
company is offering her an attractive tour package in which she needs to pay only
Q20 10% of amount upfront which is Rs 20,000/- while the remaining amount may be
repaid in 60 EMI’s of Rs 5000 each. She wants to know the approximate rate of
interest that is being charged to her in this offer.

A) 22.27%
B) 1.857%
C) 24.70%
D) 21.12%

ANSWER: 24.70%
 Solution

APR 9.50%
EAR 9.92%

Solution

On road price (110%) 450000

Ex-Showroom price (100%) 409091
Finance 80%
Loan Amt (Principal) 327273
Nper 3
Rate 11.50%
EMI -10792
Total EMI amt to pay 388517
Interest to pay Rs. 61245

Solution

Nper 20
Loan 3000000
Rate 1 10%
 EMI 1 -28951
Principal Paid in 24 months -104482
O/s Principal 2895518
Remaining Tenure 18
3000000 Rate 2 11%
0.008333333333333 EMI 2 -Rs. 30839
240
₹ -28,950.65 Find new emi
loan value ₹ -2,895,517.51
loan outstanding nper 216
princip paid so far rate 11%
emi ₹ -30,838.70

HW Solution

find nper
Nper 20
Loan 3000000
Rate 1 10%
EMI -28951
Principal Paid in 24 months -104482
O/s Principal 2895518
Rate 2 11%
new Tenure 272.51
Original remaining months 216.00
Increase in months 56.51

Refinance Solution

Loan 400000
moths 84
rate 11.0%
new rate after 3 yrs 9.5%
pre-penalty clause 2.0%
EMI -6849
Outstanding loan after 3 yrs -264997
Re-finance amt. -270296
remaining tenure 48
New EMI -6791
He is paying EMI Rs. 6791 per month for outstanding loan of Rs. 264997
 rate 0.88%
APR 10.55%
AER 11.07%

Solution

Tenure of loan – 240 months

Loan amount – Rs.4000000
Initial Rate of Interest – 10.00% p.a.
Rs.38601
EMI began in July 2010 –
EMI installments repaid till 18
December 2011 –
Loan outstanding as at Rs.3898160
December 2011 –
Revised Rate of Interest 10.75% p.a.
beginning January 2012 –
New EMI effective January Rs.40516
2012 –

Loan outstanding to be repaid Rs.3881226

to Finance Co. in Mar 12 –
Processing fee @ 1% of
outstanding loan taken from Rs.38812
Bank –
Rate of Interest charged by 10.25% p.a.
bank beginning April 2012 –
Outstanding tenure being new 219 months
tenure for bank loan –
Rs.39245
EMI to be charged by Bank –
Amount to be incurred from Rs.8872908
Apr 2012 in earlier loan –
Revised amount incurred Rs.8594694
towards EMIs –
Processing fees included in Rs.8633507
revised amount incurred –
Savings (absolute) in Rs.239401
refinancing the loan –
 Solution

Today
Gold Price / troy ounce (USD) 1113
Currency Exchange Rate (Rs./USD) 46.22
Gold Price / troy ounce (Rs.) 51443
After One Year
Gold Price / troy ounce (USD) 1250
US Dollar depreciated against Rs. Or Appreciation of Rupee 4.80%
Currency Exchange Rate (Rs./USD) 44.00
Gold Price / troy ounce (Rs.) 55002
Appreciation of Gold prices (in INR) 6.92%
Appreciation of Gold prices (in USD) 12.31%

Solution

Car price 1500000

Down payment 700000
Loan 800000
Processing Fee (upfront) 2%
Rate 10%
Tenure (months) 45
Processing amount 16000
 Net Loan Amunt 816327
EMI -21829
New Revised Rate 0.928%

Solution

Home loan taken of 20 lac

PV - 2000000
Period in years - 20
period in months - 240
Rate (Nominal) - 12%
Rate for EMI - 1.00%
EMI i.e.PMT - ?

EMI - ₹ -22,021.72

Solution

Price 200000
Down payment 40000
Tenure Half yearly 5
Rate 10%
Principal 160000
EMI -Rs. 36956

Solution

TV Cost 150000
Down payment 20000
Tenure term (half yearly) 5
Rate 10%
Loan amount 130000
EAR 10.25%
Interest accured (1.5 years) 150491
Net Loan Amt 280491
EMI -Rs. 33104
 Solution

Total Loan Amt 1500000

Rate 10.25%
Tenure 15
EMI -Rs. 16349

Solution

ABC Ltd
Car Loan 800000
Rate 6%
Tenure 5
Processing Fee 2%
Processing Amt 16000
Revised Loan Amt
EMI
Total EMI Amt
Interest to pay 240000
Total payment 256000

Solution please correct QTN … EMI on 01/01/2006 instead of 01/01

 Loan amt 2000000
Rate 9.50%
Term 15
EMI -20884

EMI Tenure
23

Principal paid in 2 years -126877

Outstanding principal after 2 yrs 1873123

EMI Tenure
New Nper 61

Revised EMI -38835

Increase in EMI -Rs. 17950

Solution

Flat cost 5000000

Loan amt 3500000
Rate 9%
Tenure 15
EMI -35499
Inflated Flat cost (Fv after 6 yrs) 9000000
Appriciation in value 4000000
Tax 15%
Value of Flat post tax 8400000
Principal paid in 6 years -878751
Outstanding principal after 6 yrs 2621249
Home Equity Rs. 5778751
 Solution

Amt to pay upfront (10%) 20000

package cost (100%) 200000
Remaining amt to finance 180000
EMI Tenure 60
EMI 5000
Rate / month 1.86%
APR 22.28%
EAR 24.70%
Comd monthly
comd yearly

450000 = P * (1+10%)
409091

B
(B-A)
 -2895518

after 2 years

-2895518
after 2 years
Months
Months
Months

an of Rs. 264997
 [PMT (10%/12, 240,-4000000, 0,
0)]

[PV (10%/12,240-18,-38601, 0, 0)]

[PMT (10.75%/12,240-18,-
3898160, 0, 0)]

[PV (10.75%/12,240-18-3,-40516,
0, 0)]

[3881226*1%]

(240-18-3)

[PMT (10.25%/12, 219, -3881226,

0, 0)]

(40516*219)

(39245*219)

(8594655+38812)

(8872908-8633507)
actual loan disbursement = original loan amt. / (1-processing fee)

compd HY

Type 0

compd HY

150491

Type 1 (Beginning)
 XYZ Ltd
800000
10.25%
5
1.5%

812183 actual loan disbursement = original loan amt. / (1-processing fee)

-17357
1041394
229211 A
B
Rs. 26789 (B-A)

MI on 01/01/2006 instead of 01/01/2005

A

EMI Start EMI End

01-Jan-06 01-Nov-07

-1873123

EMI Start EMI End

01-Dec-07 01-Dec-12

B
(A-B)

-2621249
 12183
800000