Question

Jane has an interest only loan for an investment property. The loan is for K200000 and an interest rate of 52% p.a with fortnightly repayments. Calculate the fortnightly repayment amount. Show working out

Answer 1

To calculate the fortnightly repayment amount for an interest-only loan, you can use the formula for interest calculation:

\[
\text{Fortnightly Repayment} = \frac{\text{Principal} \times \text{Annual Interest Rate}}{\text{Number of Fortnightly Periods in a Year}}
\]

Where:
- Principal = K200,000
- Annual Interest Rate = 52% or 0.52
- Number of Fortnightly Periods in a Year = 26 (since there are 52 weeks in a year, and you get 26 fortnights)

Now substituting the values into the formula:

1. Calculate the Annual Interest Amount:
\[
\text{Annual Interest Amount} = K200,000 \times 0.52 = K104,000
\]

2. Calculate the Fortnightly Repayment:
\[
\text{Fortnightly Repayment} = \frac{K104,000}{26}
\]
\[
\text{Fortnightly Repayment} = K4,000
\]

Thus, Jane's fortnightly repayment amount for the interest-only loan is **K4,000**.