Best Answer:
If,

R = (1 + r/100) where r is rate of interest divided by number of installments in the period of interest.

P = Principal or Loan Amount.

n = Total number of installments one has to make.

EMI = Equated monthly installment.

Then for a simple case of three installments,

((PR - EMI)R - EMI)R - EMI = 0

Simplyfying,

PR3 = EMI * (1 + R + R2)

Without any loss of generality,

PRn = EMI * (1 + R + R2 +... + Rn-1).

Thus,

EMI = PRn(R-1)/(Rn-1)

or,

EMI = P*r/100*(1 + r/100)n/((1 + r/100)n - 1)

Thus, if loan amount is 10,00,000 for 5 years @ 6% (half yearly), installments being paid every month then,

P = 10,00,000

r = 6/6 = 1. (Six installments being paid in half year.)

n = 12*5 = 60 installments.

So, EMI = 10,00,000 * 0.01 * 1.0160/(1.0160 - 1) = Rs 22,244.

I hope this helps...

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