What is defined as the money paid for the use of borrowed funds?

Interest is defined as the money paid for the use of borrowed funds. It represents the cost of borrowing, which is calculated as a percentage of the principal amount borrowed. Lenders charge interest as a way to compensate for the risk involved in lending money and for the opportunity cost of not using that money elsewhere.

In various financial and business contexts, including those relevant to funeral service education, understanding how interest works is crucial. It impacts budgeting and financial planning, whether it's for personal loans, mortgages for funeral homes, or funding for educational expenses.

The other terms have distinct meanings: the principal refers to the original sum of money borrowed or invested, dividends relate to a share of profits paid to shareholders, while equity represents ownership interests in an asset after all liabilities have been accounted for. Each of these concepts serves a different role in financial discussions but does not accurately describe the cost associated with borrowing funds.