Time Value of

Money
Emeled May Abrio- Salvañ a, MBA II
 Look Ahead
• Definition of Time Value of Money
• Why time is important?
• Notations
• Formulas
• Example Calculation
• Calculations using Tables
• Benefits of the Knowledge of Time Value of Money
Pre-view
TVM- Time Value of Money
• Time value of money means that
a sum of money is worth more
now than the same sum of money
in the future.
• This is a core principle of finance.
A sum of money in the hand has
greater value than the same sum
to be paid in the future.
• The time value of money is also
referred to as present discounted
value.
• Which would you rather have? $ 1,000 today or $1, 000 in 5 years?
• Money receives sooner rather than later allows one to use the funds for
investment or consumption purposes.
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References:
https://
www.investopedia.com/terms/t/ti
mevalueofmoney.asp