The cost paid for borrowing money, usually expressed as a percentage rate.
For example, a business borrows $80,000 at a 9% annual interest rate. In the first year, it pays approximately $7,200 in interest — the cost charged by the lender for the use of their money — on top of any principal repayment included in the monthly payment.
Why it matters: It is the cost of renting money; minimizing interest expenses directly accelerates wealth accumulation and profitability.
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