How do you calculate effective interest cost on compensating balance?

Effective cost of funding=[(1+foreign interest rate)(1+forward premium)]-1

That depends on what you DO know. You might consider asking again, being more specific about what information you have. For example, if you know the amount of interest, the principal, and the length...

the amount times % divided by 365= 1 day then multiply that by # of days for month etc... eg: 10000*4%/365=1.096/day 1.096*30=32.88 interest for 1 month

Pmt/principal