You want to buy a 285 litre refrigerator for Rs.10000 on an installmentbasis. A distributor is prepared to sell the refrigerator on instalments. He states that the payments will be made in 4 years,...

You want to buy a 285 litre refrigerator for Rs.10000 on an installmentbasis. A distributor is prepared to sell the refrigerator on instalments. He states that the payments will be made in 4 years, interest rate being 12 percent. The annual payments will be as follows:Principal 10000Four year of interest at 12%, 10000*0.12*4 4800Total 14800Annual payments 14800/4 3700What rate of return is the distributor earning? If your opportunity cost ofcapital 14 percent will you accept the offer? Why?