Total Interest
WAL allows one to easily compute the total interest payments, which is given by:
where r is the annual interest rate and P is the initial principal.
This can be understood intuitively as: "A dollar of principal is outstanding for on average the WAL, hence the interest on an average dollar is, and now one multiplies by the principal to get total interest payments".
Read more about this topic: Weighted-average Life
Famous quotes containing the words total and/or interest:
“Unlike Descartes, we own and use our beliefs of the moment, even in the midst of philosophizing, until by what is vaguely called scientific method we change them here and there for the better. Within our own total evolving doctrine, we can judge truth as earnestly and absolutely as can be, subject to correction, but that goes without saying.”
—Willard Van Orman Quine (b. 1908)
“Treading the soil of the moon, palpating its pebbles, tasting the panic and splendor of the event, feeling in the pit of one’s stomach the separation from terra ... these form the most romantic sensation an explorer has ever known ... this is the only thing I can say about the matter. The utilitarian results do not interest me.”
—Vladimir Nabokov (1899–1977)