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Question
Explain the following term/concept.
Interest
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Solution
Interest is the price paid for the productive services rendered by capital. It is a charge against the profit of the company. Even if the company makes no profit, interest should be paid. It is payable at a fixed and generally pre-determined.
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______ is a return paid to creditors by the company.
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Interest is paid to shareholders.
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Dividend is an obligation to be paid by a company every year.
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The reward given for the use of capital
What do you mean by interest?
