Answer
Time value of money plays a very important role in capital budgeting and investment decision so we need to understand the very deeply the concept of time value of money.
The value of money received today is more than the value of money received after some time in the future ,this is because of the following reasons
1.Inflation
2.Risk
3.Investment opportunity
4.Personal consumption preference
The time value of money matters a lot because we are using this concept in day to day business life like decision making, approval of project, chosing between to comparable project for maximum returns. Time value of money is also important for investor because it allows investors to make a more informed decision about what to do with their money
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