A loan of ₹1,50,000 carries 10% simple interest A repayment of ₹50,000

Type: MCQ • Marks: 1

A loan of ₹1,50,000 carries 10% simple interest A repayment of ₹50,000 is made after six months

A. The ₹50,000 repayment has no effect on future interest

B. Future interest should generally be based on the reduced principal from the applicable effective date

C. Interest must always be calculated on ₹1,50,000 for the full duration

D. The loan automatically closes

Explanation

Under a reducing-balance approach, principal repayments reduce the future interest base.

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UPSC Principal & Vice Principal Management Finance Administration

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A loan of ₹1,50,000 carries 10% simple interest A repayment of ₹50,000 is made after six months