Skip to content
ENExplore Calculators

Marginal Cost Of Funds Calculator

Work out marginal cost of funds instantly with clear inputs, formula shown and shareable results.

About Marginal Cost Of Funds Calculator

Lending should be priced off the marginal cost of raising the next unit of funding, not the average cost of the existing book. Adding operating cost to the weighted funding rate gives the floor below which new lending destroys value.

Formula

Marginal cost of funds

Marginal cost = deposit rate × weight + borrowing rate × (1 - weight) + operating cost

Worked example

With the default values below, Marginal Cost Of Funds Calculator returns Marginal Cost Of Funds of 7.2100%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Rate On New Depositsaccepts 0–100 %
6.5 %
Share Funded By Depositsaccepts 0–100 %
80 %
Rate On New Borrowingsaccepts 0–100 %
7.8 %
Operating Cost In Basis Pointsaccepts 0–500
45

Results

Marginal Cost Of Funds
7.2100%
Blended Funding Cost
6.7600%
Operating Cost Component
0.4500%
Deposit Share Of Funding
80.0%

Step by step

  1. 1Values used
  2. 2Marginal cost of funds
  3. 3Marginal Cost Of Funds= 7.2100
  4. 4Blended Funding Cost= 6.7600
  5. 5Operating Cost Component= 0.4500
  6. 6Deposit Share Of Funding= 80.0

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why marginal rather than average cost?

Because the existing book is already funded. New lending must be paid for at today's rates.

Does the mix matter much?

Yes. Shifting funding from deposits to market borrowing raises the marginal cost and should feed straight into pricing.

Related Calculators

Marginal Cost Of Funds Calculator | Calcrivo