10.87. The time value of money in any economic analysis can be most easily expressed in terms of interest. This is true even for equity funds where a “rate of return” is really meant. In the broad sense, therefore, interest can be considered money paid for the use of other money, either borrowed or part of the equity of a company. The interest concept must be applied whenever time is a variable whether or not interest is actually paid. This concept can be applied in various ways. For example, capital investments in equipment may not be made at the same time when the equipment is put into service or when “revenue” is produced as a result of the equipment purchased. Therefore interest charges must be added to the investment cost.