Personal Financial Management
The time value of money is a financial concept that asserts that a sum of money has greater value today than it will in the future due to its potential earning capacity. This principle highlights the importance of time in finance, illustrating how money can grow over time through investments, interest, and other returns. Understanding this concept is crucial when evaluating present values, making loan calculations, or assessing the worth of annuities, as it impacts decision-making related to future cash flows.
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