Time Value of Money Internet Search

Time Value of Money Internet Search

The time value of money is a concept that implies that money held at hand at the present is worth more than the one promised for a future date. That is why a dollar is worth more today than a day later. According to Jasan (2018), in the article covering various issues related to the time value of money, money loses value over time. There are three major reasons why money loses value over time. The first reason is inflation. Arguably, the purchasing power of money reduces over time due to inflation. The second factor is the opportunity cost associated with having money at hand compared to being promised money in the future. Notably, the opportunity cost of money represents the opportunities lost today for not having money at hand presently. Finally, the time value of money is related to the risk versus return. When money is to be received in the future, there is a default risk that is assumed, which makes the value of money more important currently than in the future.

It is thus clear that money is worth more today than tomorrow. According to Jasan (2018), risk, interest, earning potential, and interest are the significant reasons. As a result, the time value of money makes an effort to include these considerations to inform the capital and financing decisions of the managers. Through the time value of money, an objective evaluation of cash flows from different periods in the future is made. The worthiness of projects is evaluated based on this concept, whereby the present value of cash flows gained from the project is evaluated. Further, Muda & Hasibuan (2018) note that discounting future cash flows and compounding present values ensures a practical analysis of cash inflows and outflows. Thus, the time value of money is an essential aspect of decision-making.

References

Jasan, D. (2018). Time Value of Money. Business Standard. https://www.business-standard.com/article/markets/time-value-of-money118062600365_1.html#:~:text=The%20core%20idea%20behind%20’time,1%20lakh%20after%205%20years

Muda, I., & Hasibuan, A. N. (2018). Public discovery of the concept of the time value of money with the economic value of time. In Proceedings of MICoMS 2017. Emerald Publishing Limited. https://doi.org/10.1108/978-1-78756-793-1-00050

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

---

Time Value of Money Internet SearchUnit 3 Discussion: Time Value of Money Internet Search
Search the Internet for any short article related to our topics this week on the time value of money.

For the purpose of the discussion, avoid sites such as Wikipedia or Investopedia. Once you find an article, discuss what you’ve learned or what your thoughts are. Please also post a link to the article so others can access it.