Basic Time Value Concepts Nature of Interest Payment for the use of money. Excess cash received or repaid over the amount borrowed (principal). Variables involved in financing transaction: 1.Principal Amount borrowed or invested. 2.Interest Rate A percentage. 3.Time-The number of years or portion of a year that the principal is outstanding. Chapter 6-6 LO 1 Identify accounting topics where the time value of money is relevant.Chapter 6-6 Payment for the use of money. Excess cash received or repaid over the amount borrowed (principal). Variables involved in financing transaction: 1. Principal - Amount borrowed or invested. 2. Interest Rate - A percentage. 3. Time - The number of years or portion of a year that the principal is outstanding. Nature of Interest