Excel 2013 Tutorial - How to Calculate a Weighted Average
In this tutorial you will learn:
How to Calculate a Weighted Average.
You use a weighted average to average values where each value plays a larger or smaller role in the whole set.
How it works:
To compute the weighted average, the percentage that each investment contributes to the total value of the portfolio is multiplied by that investment’s rate of return.
We will use the SUMPRODUCT function to find the weighted average.
Another way to calculate the weighted average is instead of using SUMPRODUCT in one cell, you calculate each investment weight in its own cell the effect of the rate on the whole is calculated, and those values are summed.