Return on Software: Maximizing the Return on Your Software Investment

Interest

The difference in the time value of money is quantifiable. It is measured in terms of interest—the money that someone pays to use someone else's money. Archeological evidence suggests that interest has been an established part of society as far back as the earliest recorded history (e.g., in Babylon circa 2000 B.C.).

Interest is, in a sense, a fee charged for renting someone else's money. It's exactly like renting a house, a car, or any thing else—the renter takes possession of the thing and later returns that thing plus some amount of money. In this case, the thing being rented just happens to also be money. The renter (borrower) takes possession of some amount of money now, using it to start a business, buy a computer or house or car, ...