Why Is the Time Value of Money Important?

Published: 2021-07-19
559 words
3 pages
5 min to read
Boston College
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The term time value of money is mainly known as the idea that the money which is available at the moment is more important than the same amount of money which will make available shortly more when it put into action.

It emphasizes that the money available at present is so much worth more in the future and this is mainly due to its potential earning capacity. This important field in the area of business finance holds that provided that the money can earn interest, any available amount of money is so much worth more as soon as it is found.

The time value of mainly the money is so important more so about the investor idea. This is because the value of any amount right is worth more than the same amount of money promised in the future. This is mainly because when the amount is properly invested in the right manner at the moment, then it accounts for such a greater amount in the future. Any amount of money promised in the future is less worth more so due to inflation. And therefore more emphasis should be put in the presently available money and more so on the investment plan to generate a reasonable profit. This the time value of money would be seen, or the influence created.

The time value of mainly the money can also be understood d in the context of the future value of money. The future value of money is always defined as the value of that particular amount of money or the asset at a specified date.

Therefore, in general, the time value of money is so important because proper analysis of the same will lead to greater interest in the future as people will understand the need of the money at hand to invest as opposed to the same amount in the future due to inflation.

Do you feel more finically literate after the three-quarter weeks of the study in this unit? Briefly, explain.

I feel so much finically literate after this time of study more so because I now understand and can correctly apply the concept of time value of money. It is so much important in the economic research since we use the concept more so when investing.

Do you think the concept introduced will be useful regardless of the future study or the career choices?

The concept introduced will be more useful both in regards to the future and also to the carrier as the issue of time a and money revolves around any financially related course.

Which key concept introduced in the last few weeks has resonated the most with you?

The central idea that has resonated with both in actual thinking and ideologically is the concept of the time value of money and also the finance in general as opposed to other concepts.

What do you think you like most in the unit so far?

There are several things that I like the most in the unit as far as we have reached. This includes the financial pat of the study, including the money and time factor majorly. This is so much from the investment point of it.

What improvements can you suggest?

The main improvements that I can suggest are that more emphasis should be driven towards the financial part of it.



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