FM-Unit 2-Time value of money|Financial Management
visit website sugarybloom.blogspot.com Time Value of Money Meaning of Time value of money The concept of time value of money refers to the idea that "Time has value". It means that a sum of money is worth more now, than the same sum will be,, at a future date due to its earnings potential in the interim. This is a core principle of finance. A sum of money in the hand has greater value than the same sum to be paid in the future. Investors prefer to receive money today rather than the same amount of money in the future because a sum of money, once invested, grows over time. FM Unit 1-Introduction to Financial management Definition Time value of money is defined as "the value derived from the use of money over time as a result of investment and re-investment." It means that money deposited into a savings account earns interest. Over time, the interest is added to the principal, earning more interest. That's the power of compoun...