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" Discuss the importance of the time value of money in finance. "
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Time value of money is a very important concepts in finance. It is based upon the fact that money received today is worth more than money received in the future.
the concept is used in capital budgeting and retirement planning. In capital budgeting the time value of money is used to assess different projects where by the net present value of different investments under consideration are calculated by discounting the future cash flows. Similarly in retirement planning future requirements are computed using the time value concept. Accordingly a person decides the amount of savings that he needs to make in order to fulfill his requirements.
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