Capital and Interest

Capital refers to the original amount of money invested or borrowed, such as a loan principal or the initial sum invested in a project. Interest is the cost of borrowing money or the earnings on invested capital, usually expressed as a percentage. When you borrow, you pay interest to the lender, and when you invest, you earn interest. Essentially, capital is the base amount, and interest is the fee or earnings generated from that amount over time. Both are fundamental concepts in finance, reflecting the cost or return associated with money over a period.