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    Importance of the Time Value of Money Concept

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    Why is the time value of money concept important in accounting?

    Under what circumstances would we use the time value of money calculations?

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    Time preference for money is an individual's preference for possession of a given amount of money now, rather than the same amount at some future time.
    three reasons may be attributed to the individual's time preference for money:
    - risk
    - preference for consumption
    - investment opportunities

    Two most common methods of adjusting cash flows for time value of money:
    Compounding?the process of calculating future values of cash flows and
    Discounting?the process of calculating present ...

    Solution Summary

    315 words with references speak on the concept of time value of money in accounting, including topics like risk, preference for consumption and investment opportunities.