If I have 2 loans, one for $54,000 at 10.5% and another for $71,000 at 4%, what is the combined interest rate? How do I figure this out?
Interest from $54,000 @ 10.5% is:
I_1 = 54,000(0.105) = 5,670
Interest from $71,000 @ 4% is:
I_2 = 71,000(0.04) = 2,840
Total Interest is:
I_t = I_1 +I_2 = 5,670 +2,840 = 8,510
If the two principals were loaned as one only, and the Interest is 8,510, then:
I_t = (54,000 +71,000)(r) = 8510
125,000(r) = 8510
r = 8510/125,000 = 0.06808
In percentage,
r = 6.808% --------****
That is the combined interest rate.