Quandaries
and Queries
Hello, my name is Kat and I am not a student at this time.
If I have three debts and 49% percent of total debt is loaned at 9% intrest, 34% of the debt is at 21% intrest and 17% of the total debt is at 14% intrest, how do I calculate the average rate of intrest on total debt? I just can seem to figure this one out. I need average percent of intrest rates for a program I am using to map out a pay down plan. thank you so much for any reply. (and yes I know I should pay down high intrest first! :) )
Hi Kat,
Suppose that your total debt was $100 and calculate how much interest you would owe in one year.
| debt number | Amount | Interest |
|---|---|---|
| 1 | $49 | 9% of $49 = 0.09  $49 = $4.41 |
| 2 | $34 | 21% of $34 = 0.21 $34 = $7.14 |
| 3 | $17 | 14% of $17 = 0.14 $17 = $2.38 |
| Total | $100 | $13.93 |
Thus on $100 you owe an interest of $13.93 and hence the interest rate is
$13.93/$100 = 0.1393 or 13.93%
Suppose now that you total debt was $K rather than $100. What changes? The debts are
49% of $K = 0.49
34% of $K = 0.34
17% of $K = 0.17
Thus I get
| debt number | Amount | Interest |
|---|---|---|
| 1 | $(0.49 K) |
9% of $(0.49 K) = 0.09 0.49 K = 0.0441 K |
| 2 | $(0.34 K) |
21% of $(0.34 K) = 0.21 0.34 K = 0.0714 K |
| 3 | $(0.17 K) |
14% of $(0.17 K) = 0.14 0.17 K = 0.0238 K |
| Total | $K | 0.1393 K |
Thus on $K you owe an interest of $0.1393 K and hence the interest rate is
0.1393
Penny