The formula to calculate interest cost is:
\[ \text{IC} = \frac{\text{TP} \times \text{IR}}{100} \]
Where:
Interest cost is the amount of money that is paid as interest on a loan or any borrowed capital. It is calculated by multiplying the total amount borrowed (total price) by the interest rate and then dividing by 100. Understanding the interest cost helps in evaluating the total cost of borrowing and planning finances accordingly.
Let's assume the following values:
Using the formula:
\[ \text{IC} = \frac{1000 \times 5}{100} = 50 \]
The Interest Cost is $50.
Let's assume the following values:
Using the formula:
\[ \text{IC} = \frac{2500 \times 7}{100} = 175 \]
The Interest Cost is $175.
