Enter the total amount borrowed ($), the annual interest rate (%/year), and the length of borrowing (years) into the Borrowing Cost Calculator. The calculator will evaluate and display the Borrowing Cost.
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Borrowing Cost Formula
The following formula is used to calculate the Borrowing Cost.
BC = A * I/100 * T
- Where BC is the Borrowing Cost ($)
- AC is the total amount borrowed ($)
- I is the annual interest rate (%/year)
- T is the length of borrowing (years)
How to Calculate Borrowing Cost?
The following example problems outline how to calculate Borrowing Cost.
Example Problem #1
- First, determine the total amount borrowed ($). The total amount borrowed ($) is given as 5000 .
- Next, determine the annual interest rate (%/year). The annual interest rate (%/year) is calculated as 2 .
- Next, determine the length of borrowing (years). The length of borrowing (years) is found to be 10.
- Finally, calculate the Borrowing Cost using the formula above:
BC = A * I/100 * T
Inserting the values from above yields:
BC = 5000 * 2/100 * 10 = 1000 ($)
Example Problem #2
The variables needed for this problem are provided below:
total amount borrowed ($) = 6000
annual interest rate (%/year) = 3
length of borrowing (years) = 4
Entering these values and solving gives:
BC = 6000* 3/100 * 4 = 720 ($)
