Time value of money is an amount of money available today can be safely invested to accumulate to a larger amount in the future.

Present value- an amount of money available today.
Future amount-amount receivable/payable at a future date

Relationship Between Present Values and Present Values
The difference between present value and future amount is the interest that is included in the future amount. It depends on two factors: 1. Rate of interest at which present value increases
2. Length of time over which interest accumulates
The basic concept of Time Value of Money:
* A PV is always less than its future amount.
* A future amount is always greater than a present value
* A dollar available today is always worth more than a dollar that does not become available until a future date * A dollar available at a future date is always worth less than a dollar that is available today

Future Value Concepts
Future Value of a Single amount
The future value of a single amount is the value at a future date of a given amount invested assuming compound interest. Formula:

FV= p X (1+i)n
Where:
FV= future value of a single amount
P= principal (present value)
i= interest
n= number of periods

Future Value of an Annuity
The future value of an annuity is the sum of all the payments (receipts) plus the accumulated compound interest on them. In computing the future value of an annuity, it is necessary to know (1) the interest rate, (2) the number of compounding periods, and (3) the amount of periodic payments or receipts. Formula:

FVoa= PMT [((1+i)n-1)/i)
Where:
FVoa = Future Value of an Ordinary Annuity
PMT = Amount of each payment
i = Interest Rate Per Period
n = Number of Periods
This measures how much you would have in the future given a specified rate of return/ discount rate.

Present Value Concepts
Present Value is an amount today that is equivalent to a future payment, or series of...

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TIMEVALUE OF MONEY (CHAPTER 4)
1. Future value (FV), the value of a present amount at a future date, is calculated by applying compound interest over a specific time period. Present value (PV), represents the dollar value today of a future amount, or the amount you would invest today at a given interest rate for a specified time period to equal the future amount....

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The Present and Future Price of Money
Trident University International
FIN 501
Module 2: Case Assignment
Dr. John Halstead
One of the most important concepts about saving and investing is the timevalue of money. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. This means money paid out or received in...

...Finance21
Prof. Khen Enriquez
This article will explain the financial concept of timevalue of money. The overview provides an introduction to the principles at work when money grows in value over time. These principles include future value of money, present value of money, simple interest and compound interest. In addition, other concepts that...

...Introduction
The timevalue of money is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. The timevalue of money can be defined as the value of money received today instead of in the future. This is based on the premise that cash in hand today is more...

...4385287
5.1 Money has a timevalue because a dollar in hand today is worth more than a dollar to be received in the future. This makes sense because if we had the dollar today, we could buy something with it or invest it and earn interest.
5.5 Compounding is the process by which interest earned on an investment is reinvested so that in future periods, interest is earned on the interest previously earned as well as the principal....

...organizations, flow of money occurs at various points of time. In order to evaluate the worth of money, the financial managers need to look at it from a common platform, namely one time duration. This common platform enables a meaningful comparison of money over different time periods.
•
An important principle in financial management is that the value of money depends on when...

...TimeValue of Money
As the name suggests it implies money valued with reference to time which may be present or future. “Time” allows the prospect to earn interest and defer consumption.
Present Value (PV) – it means the current value of money in future measured at a particular interest rate.
Future Value (FV) – it means the value of...

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