The formula to calculate the Flat Rate Efficiency (Efr) is:
\[ Efr = \frac{FR}{AH} \]
Where:
Let's say the flat rate hours produced is 50 hours and the actual hours worked is 40 hours. Using the formula:
\[ Efr = \frac{50}{40} \]
We get:
\[ Efr = 1.25 \]
So, the flat rate efficiency is 1.25.
Definition: The conversion from effective interest rate to flat rate is used to simplify the comparison of different loan products.
Formula: \( r_{flat} = \frac{2 \cdot r_{eff} \cdot n}{n + 1} \)
Example: \( r_{flat} = \frac{2 \cdot 0.05 \cdot 12}{12 + 1} \)
Definition: The conversion from flat rate to effective interest rate helps in understanding the true cost of a loan.
Formula: \( r_{eff} = \frac{r_{flat} \cdot (n + 1)}{2 \cdot n} \)
Example: \( r_{eff} = \frac{0.06 \cdot (12 + 1)}{2 \cdot 12} \)
Definition: Flat rate calculation is used to determine the interest on a loan based on the initial principal amount.
Formula: \( I = P \cdot r_{flat} \cdot t \)
Example: \( I = 10000 \cdot 0.05 \cdot 2 \)
