Blended Rate Calculator

Formula

The formula to calculate the Blended Rate (BR) is:

\[ \text{BR} = \frac{\sum (r \cdot a)}{L \cdot \text{Avg} (a)} \]

Where:

$\text{BR}$ is the blended rate (%)
$r$ is the interest rate (%) of each loan
$a$ is the amount of each loan
$L$ is the total number of loans
$\text{Avg} (a)$ is the average of the loan amounts

Blended Rate Definition

A blended rate is defined as the weighted average of the rates of a set of varying loans. It is calculated by summing the products of each loan's rate and amount, dividing by the total number of loans, and then dividing by the average loan amount. This provides a single rate that represents the overall interest rate for a group of loans with different rates and amounts.

Example Calculation

Let's assume the following values for 3 loans:

Loan 1: Rate = 5%, Amount = $1000
Loan 2: Rate = 4%, Amount = $2000
Loan 3: Rate = 6%, Amount = $1500

Using the formula:

\[ \text{BR} = \frac{(5 \cdot 1000) + (4 \cdot 2000) + (6 \cdot 1500)}{3 \cdot \frac{1000 + 2000 + 1500}{3}} = \frac{5000 + 8000 + 9000}{3 \cdot 1500} = \frac{22000}{4500} \approx 4.89\% \]

The Blended Rate (BR) is approximately 4.89%.