Interest

tl;drThe cost of borrowing money or the return earned on lending/investing money, typically expressed as a percentage of the principal amount.

Interest represents compensation for the time value of money and the risk assumed by the lender.

Consider a company borrowing $1 million at 6% annual interest for business expansion. They'll pay $60,000 annually in interest while maintaining access to the principal for business use. Similarly, investing $1 million in corporate bonds at 5% yields $50,000 annual interest income while preserving the principal investment.

Managing interest involves understanding rate structures, payment timing, and compound effects. Organizations must evaluate borrowing costs against expected returns while managing interest rate risk.

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