Simple Interest ILLUSTRATION continued: On March 31,2007,Tomalczyk borrows $20,000 for 3 years at a rate of 7%per year.Calculate the interest cost for the year ending December 31,2007. Principal PARTIAL Interest rate $20,000 YEAR Annual interest X 7% Partial year $1,400 Interest for9 months× 9/12 $1,050 Chapter 6-8 LO 2 Distinguish between simple and compound interest.Chapter 6-8 ILLUSTRATION continued: On March 31, 2007, Tomalczyk borrows $20,000 for 3 years at a rate of 7% per year. Calculate the interest cost for the year ending December 31, 2007. Principal Interest rate $20,000 Annual interest x 7% Partial year $ 1,400 Interest for 9 months x 9/12 $ 1,050