Interest Expense Formula Interest expense calculations involve 4 parts: Principal, Rate, Time, and Compounding. Use the following formula to calculate simple interest expense (which excludes compounding): Interest Expense = Principal X Rate X Time To calculate the compound interest rate, use the following formula: Principal X (1+ (R / N))(N X T) Where: R =
See Also: Interest Expense Formula What is Compound Interest Effective Rate of Interest Calculation Nominal Interest Rate When is Interest Rate Not as Important in Selecting a Loan? Capitalized Interest Interest Expense Definition Interest expense, defined as a non-operating expense on the income statement, occurs anywhere money is borrowed. Consider this part of a company’s
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