Question

Four loan balances are $6,500, $3,600, $5,400, and $7,500, respectively. The current interest rates for the loans are 7%, 5%, 6%, and 9%, respectively. If the four are to be consolidated into one loan, what is the WEIGHTED AVERAGE interest rate on that loan?

A) 6.75%
B) 7.01%
C) 7.04%
D) 7.10%

Answer 1

7.10% is the answer.

Answer 2

[(455 + 180 + 324 + 675)/(65 + 36 + 54 + 75)] = 7.10

Answer is D.