An Equated Monthly Installment (EMI) is the amount paid by a borrower each month to lender of the loan.
Let us see how to calculate EMI using mathematical formula as well as using MS Excel Spreadsheet
You bought a car in 2010 worth $30,000 by taking a vehicle loan for the rest of the amount at 15% interest per year for five years.
Let us calculate the EMI using Mathematical Formula as shown below.
where, “P” is the Principal, “r” is the interest rate (IN MONTHS) and “n” is the period of loan (IN MONTHS).
In the above example, P = $30,000, r = 15% / 12 = 1.25% and n = 5 × 12 = 60 Months.
Using these three numbers, EMI is $713.70.
Let us calculate the EMI using MS EXCEL Spreadsheet by using the PMT Function