1. What is a Blended Rate?

A blended rate is a weighted average of multiple interest rates or financial rates, where each rate is multiplied by its corresponding weight (such as loan amount or investment size) before averaging.

2. How Does the Calculator Work?

The calculator uses the blended rate formula:

Where:

• \( BR \) — Blended rate
• \( R_i \) — Individual rates
• \( W_i \) — Weights corresponding to each rate

Explanation: The formula calculates the weighted average of multiple rates, giving more importance to rates with higher weights.

3. Importance of Blended Rate Calculation

Details: Blended rates are crucial in finance for determining effective interest rates on multiple loans, calculating average returns on investments, and analyzing portfolio performance.

4. Using the Calculator

Tips: Enter rates as comma-separated values (e.g., "5, 7, 6.5") and corresponding weights in the same format. Ensure both lists have the same number of values.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between blended rate and simple average?
A: Blended rate accounts for the relative importance (weight) of each rate, while simple average treats all rates equally.

Q2: Where is blended rate commonly used?
A: Commonly used in mortgage refinancing, investment portfolio analysis, and corporate finance when consolidating multiple loans.

Q3: Can weights be percentages?
A: Yes, weights can be percentages, dollar amounts, or any unit that represents the relative importance of each rate.

Q4: What if my rates and weights lists have different lengths?
A: The calculator requires equal numbers of rates and weights. Please check your input and ensure both lists have the same number of values.

Q5: How precise is the blended rate calculation?
A: The calculation is mathematically precise based on the inputs. The result is rounded to two decimal places for readability.