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Time Value of Money Concept: Individuals & Businesses

This posting addresses the following questions:
What does the concept "time value of money" mean? Why is the concept important? What are some practical applications of this concept for businesses? For individuals? What assumptions have to be accepted when discussing the "time value of money"?

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What does the concept mean "time value of money"? Why is the concept important? What are some practical applications of this concept for businesses? For individuals? What assumptions have to be accepted when discussing the "time value of money"?

Money can be invested to produce greater earnings over time, but $100 in the future does not produce as much earnings as $100 today. This connection between time and interest is known as the concept of the "time value of money".
Time value of money (TVM) is an important idea that helps both businesses and individuals in making investment decisions. Time value of money forces one ...

Solution Summary

This solution is comprised of a detailed explanation of time value of money as it pertains to both individuals and businesses. In 400 words, the concept of TVM is explained, as well as its applications for businesses, individuals, and the assumptions that must be considered when discussing TVM.

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