# Reading 2021-07-06

## Metadata

- 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

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

where

- 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

PMTfunction inExcel. Try this example spreadsheet

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