Capitalized Interest Calculator

Formula

To calculate the Capitalized Interest:

\[ CI = WAAE \times IRB + WAAEe \times WAIR \]

Where:

$CI$ is the capitalized interest ($)
$WAAE$ is the weighted average accumulated expenditures up to the principal of specific borrowing ($)
$IRB$ is the interest rate on the specific borrowing (%)
$WAAEe$ is the weighted average accumulated expenditures in excess of the borrowing ($)
$WAIR$ is the weighted-average interest rate (%)

Capitalized Interest Definition

Capitalized interest is an amount of unpaid interest that gets added to a loan. If loan interest is not paid on time, a lender may capitalize that interest and add it to the principal.

Example Calculation 1

Let's assume the following values:

Weighted Average Accumulated Expenditures ($WAAE$) = $50,000
Interest Rate on Specific Borrowing ($IRB$) = 5%
Weighted Average Accumulated Expenditures in Excess ($WAAEe$) = $20,000
Weighted-Average Interest Rate ($WAIR$) = 4%

Using the formula:

\[ CI = 50000 \times 0.05 + 20000 \times 0.04 = 2500 + 800 = 3300 \]

The capitalized interest is $3,300.

Example Calculation 2

Let's assume the following values:

Weighted Average Accumulated Expenditures ($WAAE$) = $100,000
Interest Rate on Specific Borrowing ($IRB$) = 6%
Weighted Average Accumulated Expenditures in Excess ($WAAEe$) = $50,000
Weighted-Average Interest Rate ($WAIR$) = 3%

Using the formula:

\[ CI = 100000 \times 0.06 + 50000 \times 0.03 = 6000 + 1500 = 7500 \]

The capitalized interest is $7,500.