if the price of the TV screen is K500 and the firm advertise the TV screen at K50 quarterly payments for eight months. what is the flat interest rate been charged on the loan
To calculate the flat interest rate being charged on the loan, we need to first calculate the total amount to be paid by the end of the eight months.
The total amount to be paid over the course of eight months can be calculated as:
Total amount = 8 x K50 = K400
Now, let's calculate the total interest charged on the loan:
Total interest = Total amount - Price of TV screen
Total interest = K400 - K500 = -K100
Since the total interest is negative, it means that the customer is actually paying less than the original price of the TV screen over the course of the eight months. In this case, it cannot be considered as a flat interest rate being charged on the loan.
Therefore, there is no flat interest rate being charged on the loan in this scenario.