# Capitalized Interest Calculator

Unit Converter

Enter the weighted-average accumulated expenditures up to the principal balance of specific borrowing, the interest rate on the specific borrowing, the weighted-average accumulated expenditures in excess of specific borrowing, and the weighted-average interest rate to determine the capitalized interest.

## Capitalized Interest Formula

The following formula is used to calculate a capitalized interest.

CI = WAAE * IRB + WAAEe * 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 What is capitalized interest? A capitalized interest is an amount of unpaid interest that get’s added to a loan. In other words, if loan interest is not paid on time, a lender may capitalize that interest and add it to the principal. ## Example How to calculate capitalized interest? 1. First, determine the weighted-average accumulated expenditures up to the principal. For this example, this is$20,000.00.

2. Next, determine the interest rate of the borrowing.

For this problem, the borrowing interest rate is 5%.

3. Next, determine the accumulated expenditures in excess of the principal.

In this case, the excess expenditures is $10,000.00 4. Next, determine the weighted average interest rate. The average interest rate is 4.5%. 5. Finally, calculate the capitalized interest. Using the formula, the capitalized interest is found to be: 20,000*.05 + 10,000*.045 =$1,450.00.