Time Value of Money

Time value of money is based on the concept that a sum of money that one owns today is worth more than the promise or expectation that one will receive in the future. Money held today is more valuable because one can invest it and earn interest. A key concept of time value of money is that a single sum of money or a series of equal, evenly-spaced payments or receipts promised in the future can be converted to an equivalent value today.

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