Rosemary took a loan of $15,000 from CRDB BANK at 14% p.a with quarterly payments for 3 years. a. Compute loan repayment using both reducing balance and flat method?

To compute the loan repayment using the reducing balance method, we can use the formula:

Loan Repayment = (Principal + Interest) / Number of Payments

First, let's calculate the interest per quarter:
Interest per quarter = Principal * Interest Rate per quarter
Interest Rate per quarter = Annual Interest Rate / Number of Quarters per Year

Number of Quarters per Year = 4 (since quarterly payments)
Annual Interest Rate = 14%

Interest Rate per quarter = 14% / 4 = 0.14 / 4 = 0.035

Interest per quarter = $15,000 * 0.035 = $525

Now, let's calculate the loan repayment using the reducing balance method:
Loan Repayment = (Principal + Interest) / Number of Payments
Loan Repayment = ($15,000 + $525) / (3 * 4) = $15,525 / 12 = $1,293.75

To compute the loan repayment using the flat method, we can use the formula:

Loan Repayment = (Principal + Total Interest) / Number of Payments

Total Interest = Principal * Interest Rate * Number of Years

Principal = $15,000
Interest Rate = 14% = 0.14
Number of Years = 3

Total Interest = $15,000 * 0.14 * 3 = $6,300

Loan Repayment = ($15,000 + $6,300) / (3 * 4) = $21,300 / 12 = $1,775

Therefore, the loan repayment using the reducing balance method is $1,293.75 per quarter, and the loan repayment using the flat method is $1,775 per quarter.