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 K
34% of $K = 0.34 K
17% of $K = 0.17 K

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 K/$K = 0.1393 or 13.93%

Penny

 
 

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