"Time Value of Money " The time value of money is a critical concept to understand...

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Accounting

"Time Value of Money "
The time value of money is a critical concept to understand inaccounting, especially when dealing with loans, investmentanalysis, and capital budgeting decisions. The time value of moneyconcept can be used to decide which projects to start and whatinvestments to make. You can also utilize the time value of moneyconcept in your personal life.
Provide two (2) decisions you may need to makethat could involve the time value of money. Explain the how theimportance of the time value of money will factor into yourdecision-making process.

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1Time value of money Defintion There is no reason for any rational person to delay taking an amount owed to him or her More than financial principles this is basic instinct The money you have in hand at the moment is worth more than the same amount you may get in future One reason for this is inflation and another is possible earning capacity The fundamental code of finance maintains that given money can generate interest the value of a certain sum is more if you receive it sooner This is why it is called as the present value Basically the time value of money validates that it is more beneficial to have cash now than later Say if you invest a Rs 100 today the returns will be more compared to the same investment made 2 See Answer

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