r is the user cost of capital.
User cost refers to the expenses borne by the owner or renter of a capital asset resulting from the use of the asset for a given period of time.
A standard metaphor is that of a machine being worn down over time as it is being used. During the time of use it creates a flow of goods through a production process. The capital gets it value from this flow of goods it can create. Simplify this metaphor to a machine that during three months can produce three pieces of bread - one each month - each sold for 1 dollar. The total value of the machine 3 dollars (ignoring discounting) so if you were to buy the machine you would pay 3 dollars. However if you just want to used it for a month it will only produce 1 piece of bread the value of 1 dollar so one month of machine is just worth 1 dollar.
Things are offcourse very much more complicated but you can google how the user cost of capital is derived.