In the process of analyzing the financial and economic activities of enterprises, it is sometimes required to determine the cost of borrowed capital, the level of return on deposits or securities. For this, average interest rates are applied.
Instructions
Step 1
To find out the cost of servicing a loan portfolio, calculate the weighted average interest rate for all attracted loans. Calculate the total interest expense for the year by multiplying the loan amount by the interest rate for each contract separately and adding the resulting values. Divide the total by the company's credit supply and multiply the quotient by 100.
Step 2
To calculate the weighted average rates on loans and deposits, use the formula proposed by the Central Bank of the Russian Federation:
Pav = (V1 x P1 + V2 x P2 +… + Vn x Pn):(V1 + V2 +… + Vn), where
V1, V2, …, Vn - the volume of loans or deposits, Р1, Р2,…, Рn - the nominal interest rate under the agreement.
Step 3
When lending from different banks and there are a large number of agreements, for convenience, make calculations using a spreadsheet: in column A, indicate the loan amount, in column B - the interest rate, in column C, specify the formula for calculating the amount of annual interest (A x B), and in at the bottom of the table - the formula for calculating column totals. In a separate cell, set the algorithm for calculating the weighted average rate:
(Column C Total / Column A Total) x 100.
Step 4
If you do not know the interest rates in the context of contracts, but there is a total cost of paying interest on loans, divide it by the total amount of credit and multiply by 100 - you will get the weighted average rate.
Step 5
In addition, credit and deposit transactions can be executed on terms of a variable interest rate. In this case, its average value must be calculated taking into account the change in its value during the entire period of the contract. To do this, multiply the loan amount by the interest rate, divide by the number of days in a year (365 or 366) and multiply by the number of days it was applied. Calculate and add up the interest expense for each rate, then divide the total by the loan size and multiply that result by 100.
