Question
Why does money have a time value? This core principle of finance holds that, provided money can earn interest, any amount of money is worth
Why does money have a time value?
This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. TVM is also sometimes referred to as present discounted value.
The idea that money that is available is of greater value than the same amount of money in the future is based on its earning capacity. (compounding interest)
Can you provide at least one real-life scenario in which you can apply the concept of "time value of money"?
How much will $10,000 be worth in 10 years at 12% interest?
FV = PV *((1 + i) ^ n)
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