Business decisions are often made that have results over a long period of time. To make an informed decision we analyze the cost of tying up funds and expect to receive the funds returned plus interest. We expect to earn interest on these investments because we have a preference for using funds today and if we must wait to receive them, there should be a reward for that. The interest we earn is the reward or payment for waiting to have access to those funds.

Topics: Farm Tax Issues & Tax Planning