The basic idea of the time value of money is that a given amount of money is worth more today than the same nominal amount in the future. This is because money available now can be invested to earn returns, and inflation tends to reduce the purchasing power of future money.
Conditions: Applies when comparing monetary amounts at different points in time.; Assumes positive interest rates or inflation.
The basic idea of the time value of money is that a given amount of money is worth more today than the same nominal amount in the future. This is because money available now can be invested to earn returns, and inflation tends to reduce the purchasing power of future money.
Conditions: Applies when comparing monetary amounts at different points in time.; Assumes positive interest rates or inflation.