In Excel: calculate a weighted average with =SUMPRODUCT(A2:A10,B2:B10)/SUM(B2:B10), where column A holds the values and column B their weights — plain AVERAGE ignores the weights entirely.
On this page7
Put values in one column and their weights in the next, row-aligned.
Compute =SUMPRODUCT(values,weights)/SUM(weights).
Check: with all weights equal, the result must match plain AVERAGE.
Keep the ranges the same height, or SUMPRODUCT returns #VALUE!.
What this does
A weighted average counts some values more than others: each value is multiplied by its weight, the products are summed, and the total is divided by the sum of the weights. SUMPRODUCT does the multiply-and-sum in one step. Dividing by SUM(weights) makes the formula correct even when the weights do not add up to 1 or 100%. Most people learn this as a sequence of clicks and forget it by next week; learning it as a pattern instead is what lets you apply it to the next, slightly different version of the problem without starting from scratch. That is the difference this page is trying to make. For “weighted average cost of capital formula excel”, the reliable version is a short checking loop, not just the first command that appears to work. Run it on a deliberately small range first, watch how the affected formula change, and only then apply the same setup to the full sheet. When a formula is involved, keep the inputs labelled beside it, reference cells instead of typing values, and apply number formatting only after the result checks out. That is what makes a text operation that turns messy entries into clean, usable data useful in real work: repeatable, auditable, and not dependent on memory or luck.
A worked example
Grades 90, 80, 70 carry weights 50%, 30%, 20%. =SUMPRODUCT({90;80;70},{0.5;0.3;0.2})/SUM({0.5;0.3;0.2}) returns 83. The unweighted AVERAGE would say 80 — the heavier weight on the 90 pulls the true result up by three points. Course grades, portfolio returns, average purchase prices, survey scores — whenever observations matter unequally, the weighted average is the honest summary number. Check the referenced cells, argument order and result type in your workbook. Start with the worked example before changing an input, then compare the changed result with the calculation you expected. An error value or a result of a different type is a reason to inspect the inputs and arguments.
In Google Sheets
Google Sheets support for this task has not been verified. Check the function, arguments and workflow in the target product before transferring the example. Matching formula notation does not establish identical behaviour. The aim was to get you unstuck fast and leave you a little more capable than a copy-paste would. The answer is at the top and the detail above shows why it holds — so the next time a colleague asks, you can answer without reaching for search. For “weighted average cost of capital formula excel”, keep the input cells and the result visible while you check the formula in Excel. Follow the worked example and change one input at a time. The steps explain the workbook calculation; this page does not run a live calculator for that task.
Common mistakes
- Using
AVERAGEand silently ignoring the weights. - Skipping the division by
SUM(weights)when weights do not sum to 1. - Misaligned ranges (
A2:A10againstB2:B9) causing#VALUE!. - Blank weight cells counting as zero without anyone noticing the row dropped out.
Frequently asked questions
What is the weighted average formula in Excel?
=SUMPRODUCT(values,weights)/SUM(weights). There is no built-in WEIGHTEDAVERAGE function.
Do the weights have to add up to 100%?
No — the division by SUM(weights) normalizes any positive weights.
How do I do a weighted average in a pivot table?
Add a helper column value×weight, sum both in the pivot, and divide via a calculated field.