Gian borrows $315000$315000 at an interest rate of 5.9%5.9% per annum. It is a reducible loan whereby he pays back $1272$1272 per fortnight. If the loan was paid over a period of 1414 years, find the following:
A Reducible Loan is a loan where the interest is paid on the balance owing, or the remaining amount of the loan that is yet to be paid.
(i)(i) Find the total repayments.
To find the total repayments, multiply the fortnightly repayment to 2626 (number of fortnights in a year) and to the loan duration (in years).
Fortnightly Repayment =$1272=$1272
Loan Duration =14=14 years
$1272×26×14$1272×26×14
==
$463008$463008
(ii)(ii) Find the total interest paid.
Simply subtract the principal amount from the total repayments.
Total Repayment =$463008=$463008
Principal (PP) =$315000=$315000
$463008-$315000$463008−$315000
==
$148008$148008
(i)$463008(i)$463008
(ii)$148008(ii)$148008
Question 2 of 5
2. Question
Gian borrows $315000$315000 at an interest rate of 5.9%5.9% per annum. It is a reducible loan whereby he pays back $1272$1272 per fortnight. If the loan was paid over a period of 1414 years, find the equivalent flat interest rate.
A Reducible Loan is a loan where the interest is paid on the balance owing, or the remaining amount of the loan that is yet to be paid.
(i) Find the total repayments.
To find the total repayments, multiply the fortnightly repayment to 26 (number of fortnights in a year) and to the loan duration (in years).
Fortnightly Repayment =$2474
Loan Duration =12 years
$2474×26×12
=
$771888
(ii) Find the total interest paid.
Simply subtract the principal amount from the total repayments.
Total Repayment =$771888
Principal (P) =$580000
$771888-$580000
=
$191888
(i)$771888
(ii)$191888
Question 4 of 5
4. Question
A loan of $580000 is paid over a period of 12 years with an interest rate of 5% per annum and fortnightly repayments of $2474. Find the equivalent flat interest rate.
where: I= Total Interest Paid P= Principal Amount R= Flat Interest Rate N= Number of years of the loan
Use the given formula to find R or the flat interest rate.
Total Interest (from previous question) =$191888
Principal Amount (P) =$580000
Number of years (N) =12
I
=
PRN
Flat Interest Rate Formula
$191888
=
$580000×R×12
Substitute values
191888580000×12
=
R
Leave R on one side
0.02757
=
R
R
=
2.76%
Convert from decimal to percentage
2.76%
Question 5 of 5
5. Question
Giselle borrowed $450000 to buy a home which will be repaid over 30 years with monthly repayments of $2416. After 10 years, she lumps in $100000 into the loan and the monthly repayments remain unchanged. The graph below shows the balance owing over the period of the loan. How much did Giselle save by paying a lump sum?
