The time value of money is a financial concept that recognizes a dollar today is worth more than a dollar in the future. This is because money today can be invested to earn interest or returns over time. For example, if you have $100 now, you can invest it and potentially have more than $100 in a year.
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Conversely, $100 received a year from now is less valuable because you miss out on potential earnings. This principle is crucial in finance for making decisions about investments, loans, and savings, helping people and businesses understand the benefits of receiving money sooner rather than later.
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Table of Content for Time Value of Money PPT
- Definition
- Introduction
- Features of TVM
- Time Value of Money formula
- Time Value of Money Analysis
- Conclusion
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