A basic example of the weighted average formula would be an investor who would like to determine his rate of return on three investments. If you have a number of loans and want to understand the total interest rate. Divide the sum by the total debt.
And there you have it.
Calculating the Weighted Average Interest Rate Step 1. 100005 500003 2500007 1950 Divide that by the total amount owed 195031000 629. Add the loan amounts together to obtain the. A weighted average interest rate is used when consolidating federal student loans with a Direct Consolidation Loan.