The cost of funds is the total amount a company pays to use borrowed funds. It plays a crucial role in financial decision-making, helping businesses evaluate how much they will ultimately pay to service their debt.

## How to calculate the cost of funds

This calculator helps you assess the total cost of borrowed funds by considering the loan amount, interest rate, loan term, and optional additional costs.

- Enter the total loan amount borrowed.
- Provide the annual interest rate percentage.
- Input the loan term in years.
- If applicable, enter any extra costs associated with the loan, such as fees or taxes.
- Click 'Calculate Cost of Funds' to calculate the total cost of funds over the loan term.

### Formula Used

The calculator uses the following formula to calculate the cost of funds:

**Cost of Funds = (Loan Amount * Interest Rate * Loan Term) + Additional Costs**

This formula calculates the total cost by multiplying the loan amount by the interest rate and loan term, then adding any additional costs (if applicable).

### Example Calculation

For example, if you borrow $100,000 at an interest rate of 5% for 10 years, with an additional $1,000 in fees, the calculation would be:

**Cost of Funds = ($100,000 * 5% * 10) + $1,000 = $50,000 + $1,000 = $51,000**