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Suggested Topics for Discussion: - What is meant by the term time value of money? - Why is the net present value method super
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1)

Time value of money means the value of the money which will decrease over the time. In other words , it is related to the actual value of the amount which was earlier as compared to future value. Time Value of money is used to calculate the present value of all the future benefits at its current value.

2)

Net present value method is superior from payback or simple return method, as it takes into consideration the decrease in the value of money over the period of time. For example $100 now will be more worth as compared to 5 years after.

Net present value provides the exact amount of value which the company will receive from its investment.

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