1. What is Combined Interest Rate?

The Combined Interest Rate is a weighted average of multiple interest rates, calculated by multiplying each rate by its corresponding weight and summing the results. This is commonly used in finance to determine the overall rate when dealing with multiple investments or loans with different proportions.

2. How Does the Calculator Work?

The calculator uses the combined rate formula:

Where:

• \( r_1 \) — First interest rate (%)
• \( w_1 \) — Weight of first rate (decimal)
• \( r_2 \) — Second interest rate (%)
• \( w_2 \) — Weight of second rate (decimal)

Explanation: The weights should sum to 1.0 (100%) for accurate representation of the overall portfolio or loan composition.

3. Importance of Combined Rate Calculation

Details: Calculating combined interest rates is essential for portfolio management, loan consolidation analysis, investment planning, and comparing different financial products with varying rates and proportions.

4. Using the Calculator

Tips: Enter interest rates as percentages (e.g., 5.25 for 5.25%), and weights as decimals (e.g., 0.6 for 60%). Ensure weights are positive numbers and represent the proportion of each rate in the total.

5. Frequently Asked Questions (FAQ)

Q1: What if I have more than two rates?
A: The formula can be extended: Combined Rate = (r₁w₁ + r₂w₂ + r₃w₃ + ... + rₙwₙ) for n rates.

Q2: Should weights always sum to 1?
A: Yes, for accurate weighted average calculation, the sum of all weights should equal 1.0 (100%).

Q3: Can this be used for different types of rates?
A: Yes, this method works for any type of percentage rates including interest rates, return rates, growth rates, etc.

Q4: What are common applications?
A: Investment portfolio returns, blended loan rates, cost of capital calculations, and performance measurement.

Q5: How accurate is this calculation?
A: The calculation is mathematically precise for the given inputs. Accuracy depends on using correct rates and appropriate weights.