Let's calculate the blended rate for these three items for the first payment period. However, after three months, since we will have paid off the plotter cutter, we don't have to include it in further computations. Since each purchase's payment period is monthly, we can solve their blended rate. To further understand how to calculate blended rates and some of its applications, let us consider two different scenarios and their sample calculations in the next section of this text. In the second equation shown above, the Greek symbol sigma, Σ(), denotes the summation of all the items indicated in the parentheses.

total balance is the total of all the balances for the period.īlended rate = Σ(balances * rates) / Σ(balances).

sum of all the interests is the sum of all the interests for the period and.

We can express it in equation form, as shown below:īlended rate = sum of all the interests / total balance To calculate the blended rate, we have to sum up all the interests of each amortization concerned and divide this sum by the total of the balances (the money we owe) for the payment period we consider.

Determining the blended rate is quite an easy process. This is an APR of 3.04 percent.Now that we know what blended rate is, let us discuss how to calculate the blended rate. For a one-month CD paying 0.25 percent, the investment pays (1 + 0.0025)^12 x $1,000 after one year, which is $1,030.42. In the prior example, this was (1 + 0.015)^4 x $1,000, which came out to $1,061.37, with an APR of 6.14 percent. (1 + Interest Rate) ^ (Interest Periods) x (Initial Investment) This is the same calculation as you did in the last step, when a simple interest rate became compounded over several investment periods.

Starting with $1,000, you will have $1,015 in month 3, $1,030.23 in month 6, $1,045.68 in month 9 and $1,061.37 at the end of the year, with a total APR of 6.14 percent.Ĭalculate APR from compounded interest by determining the actual amount a CD will pay over time, dividing it by the amount initially invested and extending it (or reducing it) to one year. However, if you 'roll over' the full amount every three months, your interest will compound, turning a simple interest rate into a compounded interest rate. There are four three-month periods in a year, so this APR is 6 percent per year. For example, a CD may offer 1.5 percent simple interest over a three-month period. Calculate APR from simple interest rates by extending or reducing the time period to a single year.

Cd rate interest calculator