TIME VALUE OF MONEY

Presenter:
Muhammad Ismail Bin Muhammad Faizel
(30DIB22F1002)
Diana Natalia Binti Zaidi (30DIB22F1011)
Nurul Syashabila binti Mohd Kaharuddin
(30DIB22F1019)
Nur Amanina Farisha Binti Azman (30DIB22F1021)
Aleeya Mysara Binti Azman (30DIB22F1022)
 Table of content
01 Definition of Time Value of Money

Differences of Time Value of Money in

02 Islam and Conventional perspective

03
Example on Time Value of Money in
Islam Perspective

04
Example on Time Value of Money in
Conventional Perspective
Definition of Time Value of Money
 Definition of Time Value of Money
FROM ISLAMIC PERSPECTIVE
Time value of money refers to the concept that the value of money changes over time due
to the factors such as inflation, interest rates, and opportunity cost. In Islam, the use of
interest in financial transactions is prohibited, which affects the concept of time value of
money.

FROM CONVENTIONAL PERSPECTIVE

Time value of money is the concept that money available at present is worth more
than the same amount in the future due to its potential earning capacity. In
conventional finance, the time value of money is calculated based on the interest rate
and the length of time the money will be invested.
Differences of Time Value of Money in
Islam and Conventional perspective
Differences of Time Value of Money in
Islam and Conventional perspective
ISLAM CONVENTIONAL
Money is not a commodity though it is used as a Money is a commodity beside medium of exchange
medium of exchange and store of value and store of value

Profit on trade of goods or charging on providing

Time value is the basis for charging interest on capital
service is the basis for earning profit.

Islamic bank operates based on profit and loss Interest is charged even in case the organization
sharing. suffers losses by using bank’s funds.

Islamic banking tends to create link with the real Conventional banks use money as a commodity,
sectors of the economic system by using trade related which leads to inflation
activities.
Example on Time Value of
Money in Islam Perspective
Example on Time Value of
Money in Islam Perspective

Islamic
Profit-Sharing Mudarabah Sukuk Takaful Crowdfunding
Investment
Example on Time Value of Money in
Conventional Perspective
Example on Time Value of Money in
Conventional Perspective

Savings Account Mortgage Loan Certificates of

Deposit (CDs)

Bond Investment Annuities

Thank
You