Time Value of Money Pt.2

The Time Value of Money

The time value of money is sometimes referred to as the Net Present Value (NPV) of Money.
The time value of money can be calculated depending on when the cash flow is to be received and depends on whether you want to know the value of the money today or the value at a date in the future.
This can be calculated using the present value or future value of a single payment or a series of payments in the future.


You might say, why does the time value of money matter? The time value of money is an important concept to your personal finance. Whenever, money coming or going, at some point in time, is involved, the time value of money. Well, it helps you to be a good decision-maker at selecting the best option that is favorable for you. It could be selecting the best mortgage payment plan or selecting the best investment opportunities or the best retirement plan or even a loan transaction.
For businesses time value of money to compare projects with varying cashflows and also determine whether a project will be profitable. 


In later blogs, we will apply the TVM formula which will be a great tool that can help you make smarter financial decisions.


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References

[1] BULB, 'Write to Earn. Read to Earn' (online, 2022) <https://www.bulbapp.io/>