EMI stands for Equated Monthly Installment, which is a fixed payment amount made each month to repay a loan over time. It is used to pay off both the principal and interest portions of the loan each period so that the loan is fully retired at the end of the repayment term. The document provides an example calculation of an EMI for a loan and explains that EMI makes budgeting easier for borrowers by keeping the monthly payment amount consistent. It also describes how to calculate EMI using the PMT formula in Excel.

1. EMI
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2. What is EMI
EMI stands for Equated Monthly Installment
A fixed payment amount made by a borrower to
a lender at a specified date each calendar
month.
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3. What is EMI
Equated monthly instalments
They are used to pay off both interest and
principal each month, so that over a specified
number of years, the loan is paid off in full.
=
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4. What is EMI
It further explains that, with most common types of
loans, such as real estate mortgages....
The borrower makes fixed periodic payments to the
lender over the course of several years with the
goal of retiring the loan.
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5. EMI
The benefit of an EMI for borrowers:-
1.Exact amount every month is known
2. Easier personal budgeting process
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6. How to calculate EMI?
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7. Let’s take an Example
Mr. Rich borrows Rs 1800000 for his site from
IDBI Bank.
Rate of interest is 11%
Tenure is 10 years
What is the EMI amount he has to pay every
month to the bank?
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8. 1800000
120
0.92%
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9. Have you got Rs 24795?
If so you are right
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10. • Mr. Car lover buys a car for 50,00,000. He pays
cash of Rs 20,00,000. He borrows Rs 30,00,000
from HDFC bank. The rate interest is 10%.
The loan is for 3 years.
Calculate the EMI.
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11. Now try using = PMT formula is Excel
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12. PMT
• Rate is the interest rate for the loan.
• Nper is the total number of payments for the loan.
• Pv is the present value, or the total amount that a series
of future payments is worth now; also known as the
principal.
• Fv is the future value, or a cash balance you want to attain
after the last payment is made. If fv is omitted, it is
assumed to be 0 (zero), that is, the future value of a loan is
0.
• Type is the number 0 (zero) or 1 and indicates when
payments are due.
• Set type equal to If payments are due 0 or omitted At the
end of the period 1 At the beginning of the period
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13. Notes
• Make sure that you are consistent about the units
– Rate
– nper
• If you make monthly paymThe payment returned by
PMT includes:-
– Principal and interest
– but no taxes, reserve payments, or fees
ents on a four-year loan at an annual interest rate of 12
percent, use 12%/12 for rate and 4*12 for nper.
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14. EMI calculation using Excel Template
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