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Video instructions and help with filling out and completing Which Form 2220 Installment

Instructions and Help about Which Form 2220 Installment

Hello friends. Calculation of equal monthly installments is important when a person is raising a loan with a fixed maturity. There are several options to repay the loan. One option is to repay the loan in one lump sum at the end of the maturity period, including the principal and interest. Another option is to repay only the principal at the end of the maturity period, while paying interest periodically. The third option is to repay the loan in equated installments, which includes both interest and a portion of the principal. In this text, we will focus on the third option, calculating equated installments. This method is frequently used by banks for mortgage loans, home loans, and house loans. Let's use an example to illustrate the calculation. The loan amount is 10 lakh rupees, with a repayment period of six months in monthly installments. The interest rate is 12%. We will calculate the equated monthly installment (EMI) using a mathematical formula and a table method. First, let's calculate the EMI using the mathematical formula: EMI = (Principal * Rate of Interest * (1 + Rate of Interest)^Number of Installments) / ((1 + Rate of Interest)^Number of Installments - 1) In this case, the principal amount is 10 lakh rupees, the rate of interest per installment period is 2% (since the annual interest rate is 12%, we divide it by 12), and the number of installments is 6. Substituting these values into the formula, we get: EMI = (10,00,000 * 0.02 * (1 + 0.02)^6) / ((1 + 0.02)^6 - 1) Simplifying this equation, we find that the EMI is 1,78,526 rupees. Now let's calculate the details using the equated installment amount of 1,78,526 rupees. We will consider the EMI, interest amount, principal amount, and the outstanding balance of the loan for each month. At the end of the...