What is the formula for calculating the weighted average yield?

Question

I need to calculate the weighted average yield on a pool of loans, all with different interest rates and balances. Excel doesn't have a weighted average yield formula, so I need to know how to calculate this. Someone borrowed my cash flow textbook so I can't look it up.

Answer 1

A weighted average is calculated by doing the following:

1) Multiply each interest rate by the balance associated with that rate
2) Add up the products from step 1
3) Add up the balances
4) Divide the sum from step 2 by the sum from step 3. The result will be your weighted average yield.

Answer 2

Weighted Average Yield

Answer 3

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What is the formula for calculating the weighted average yield?
I need to calculate the weighted average yield on a pool of loans, all with different interest rates and balances. Excel doesn't have a weighted average yield formula, so I need to know how to calcul...

Answer 4

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A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing: WACC = E D __ * Re + __ * Rd * (1 - Tc) V V Where: Re = cost of equity Rd = cost of debt E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate Broadly speaking, a company’s assets are financed by either debt or equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances. A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. It is the appropriate discount rate to use for cash flows with risk that is similar to that of the overall firm. Sorry, the calculation formula doesn't print out the way I typed it in the window. It should show E/V and D/V.

Answer 5

Kathryn's answer is definitely NOT correct for weighted average. What she gave was information for a basic average. Weighted average is calculate in a far different manner.

Answer 6

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Answer 7

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