Correct the setup as soon as you see the problem. A clean recovery is much better than continuing with a calculation you know is wrong.

Say briefly what changed, restate the correct equation, and continue. You do not need a long apology. Interviewers care more about whether you can recognize and fix an error than whether every line is perfect.

After the calculation, interpret the result and reconnect it to the case. That helps prevent the mistake from dominating the rest of the discussion. If useful, this guide on case interview mental math gives more detail.