Reading 2021-07-06


  • Ref:: Corporate Finance Institute
  • Title:: What is an Equated Monthly Installment (EMI)?
  • Author::
  • Year of publication::
  • Category:: Blog
  • Topic::

Notes from reading

  • An equated monthly installment (EMI) is a type of payment made by borrowers to lenders on a monthly basis in a fixed amount.
  • EMIs include both the interest and principal amounts.
  • After a certain number of EMIs are made, the loan will be fully paid off.

Reducing-Balance Method

A=Pr(1+r)n(1+r)n1\boxed{A=P*\frac {r(1+r)^n} {(1+r)^n-1}}


  • A = Periodic EMI amount
  • P = Principal borrowed
  • r = Periodic interest rate (annual interest rate/12)
  • n = Total number of payment (number of months during the loan tenure)

NOTE: the period can be month, year or whatever equal period you can imagine. Just make the appropriate change for r and n

NOTE: Or simply use PMT function in Excel. Try this example spreadsheet