calculate weighted average effective interest rate

  • Thread starter Thread starter GK
  • Start date Start date
G

GK

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

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