Question

Unit 3 Discussion: Time Value of Money Internet Search Search the Internet for any short article related to this weeks' topic - the time value of money. For this discussion I will not accept accept articles/data from Wikipedia, Investopedia or The Street Once you find an article that interests you, discuss what you've learned or what your thoughts are. And please also post a link to the article so others can access it.

Answer 1

The link that I've provided, interested me , just for the simplicity in explaining the concept of attaching time value to money and also for the real-life application .

It starts with a simple diagram/graph, demonstrating how value of money increases over time-- to explain the basic concept that money earns money , in the form of interest.

It explains how the purchasing power of a given sum of money reduces over time , due to the effects of inflation , in the overall economy.

Formula to find the future value of a given sum and also to find the current value of a sum to be received in future , have been well explained.

Using the above present value concept, net present values of a series of cash flows is calculated, to arrive at the net present value, which is the current worth of that investment opportunity, which will generate these cash flows--- with the help of which the investor , will decide favourably or otherwise , about the project.

Thus, knowledge about the time value of money , is very helpful , in all types of decision-making , involving money.

The link to the article is :

https://corporatefinanceinstitute.com/resources/knowledge/valuation/time-value-of-money/