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Time Value Money in Finance

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What is Time Value Money (TVM) and it's importance in financial situations?

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Solution Summary

This solution describes the concepts of Time Value Money and provides a structured examples and also explains its importance in financial situations.

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The basic idea of time value of money is that a dollar today is worth more than a dollar tomorrow. That is you would rather have a dollar now than later, BUT would rather pay later if possible.

http://www.financeprofessor.com/financenotes/introductoryfin/timevalueofmoney.html

For example, If you're like most people, you would choose to receive the $10,000 now. After all, three years is a long time to wait. Why would any rational person defer payment into the future when he or she could have the same amount of money ...

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