calculate weighted average effective interest rate

[GK]

how do you calculate weighted average effective interest rate for small
businesses who have multiple number of overdrafts, overdrafts and other
liabilities.

 

[Sam Wilson]

Add up the interest charge for each liability, divide this figure by the
total liabilty...

So if you've got £100 at 5%, and £200 at 7% the effective rate is
(5+14)/300, which is 6 and a bit.

Sam

 

[Jim]

So, what if the 100 was last year and the 200 was today?

 

[Sam Wilson]

I don't quite see what you're getting at - The weighted average is always
going to be the total interest charge over the total liability. Whether it's
an average over several liabilities, several years or both shouldn't matter?