How To Calculate WAM. In essence you should be looking at this particular term loan as a series of shorter term loans with different final maturities. Year 4 4 x 6000 24000.
So to calculate the average life you should calculate the average.
The amount of time that the average dollar of principal on a loan remains outstanding is called. If the coupon was 0 and the loan was amortizing linearly then WAL will be exactly half of the loan tenor plus half a period. The following formula will calculate the average life for this particular bond. This life expectancy calculator can give an idea of the life expectancy based on current age smoking habits gender and several other important lifestyle choices.