• 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 ($) = 6000 annual interest rate (%/year) = 3 length of borrowing (years) = 4 Entering these values and solving gives: BC = 6000* 3/100 * 4 = 720 ($)