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Interest Definition

May 28, 2015

Mike Kappel

Definition
Interest is the money paid to a lender by the borrower in addition to the money that was borrowed (principal).

Expanded Definition
As a small business owner you might be charging interest to a customer, or paying interest to a lender (e.g., bank). Interest is usually computed as either nominal interest (flat rate), real interest (takes inflation into account), or effective interest (compounded).

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