The time value of money is the idea that money presently available is worth more than the same amount in the future due to its potential earning capacity.
 | | Time Value of Money - TVM | | The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. TVM is also sometimes referred to as present discounted value. | | Breaking it Down: | | The time value of money draws from the idea that rational investors prefer to receive money today rather than... | | Read More » | | Related to "Time Value of Money - TVM" | | | | Compounding | | Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. | | Read More » | | | Continuous Compounding | | Continuous compounding is the process of calculating interest and reinvesting it into an account's balance over a theoretically infinite number of periods. | | Read More » | | | Interest Rate | | Interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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