The weighted average multiplies each loans interest rate by the loan balance and divides the sum by the total loan balance. If someone has five children and their weights are 20 35 80 100 and 145 pounds their average weight is 20 35 80 100 1455 2805 56 pounds. Calculating Weighted Average When the Weights Add up to 1 1.
A basic average or mean is just the sum of all the observations in a sample divided by the number of observations in the sample.
Start by selecting the cell where you want the result to. First the AVERAGE function below calculates the normal average of three scores. The relevance of each number is called its weight. A weighted average interest rate is an average that is adjusted to reflect the contribution of each loan to the total debt.