Enter the total amount borrowed ($), the annual interest rate (%/year), and the length of borrowing (years) into the Borrowing Cost Calculator. The calculator will evaluate and display the Borrowing Cost. 

Borrowing Cost Formula

The following formula is used to calculate the Borrowing Cost. 

BC = A * I/100 * T

  • Where BC is the Borrowing Cost ($)
  • AC is the total amount borrowed ($) 
  • I is the annual interest rate (%/year) 
  • T is the length of borrowing (years) 

How to Calculate Borrowing Cost?

The following example problems outline how to calculate Borrowing Cost.

Example Problem #1

  1. First, determine the total amount borrowed ($). The total amount borrowed ($) is given as 5000 .
  2. Next, determine the annual interest rate (%/year). The annual interest rate (%/year) is calculated as  2 .
  3. Next, determine the length of borrowing (years). The length of borrowing (years) is found to be 10.
  4. Finally, calculate the Borrowing Cost using the formula above: 

BC = A * I/100 * T

Inserting the values from above yields: 

BC = 5000 * 2/100 * 10 = 1000 ($)

Example Problem #2

The variables needed for this problem are provided below:

total amount borrowed ($) = 6000

annual interest rate (%/year) = 3

length of borrowing (years) = 4

Entering these values and solving gives:

BC = 6000* 3/100 * 4 = 720 ($)