The time value of money is a financial concept that describes the idea that money today is worth more than the same amount of money in the future. This is because money today can be invested and earn interest or returns, which will increase its value over time.
In other words, if you have a choice between receiving $100 today or $100 in a year from now, you would generally prefer to receive the $100 today because you can invest it and earn interest, whereas the $100 in a year will not have had a chance to earn any interest.
The time value of money is important in financial planning and investment decisions, as it helps individuals and businesses to determine the value of future cash flows and make informed decisions about investments and borrowing. By understanding the time value of money, you can make better financial decisions that can help you achieve your goals over the long-term.
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