What does time value of money mean?
Definitions for time value of money
time val·ue of mon·ey
This dictionary definitions page includes all the possible meanings, example usage and translations of the word time value of money.
Wikidata
Time value of money
The time value of money is the principle that the purchasing power of money can vary over time; money today might have a different purchasing power than money a decade later. The value of money at a future point in time might be calculated by accounting for interest earned or inflation accrued. The time value of money is the central concept in finance theory. However, the explanation of the concept typically looks at the impact of interest, and for simplicity, assumes that inflation is neutral. For example, £100 invested for one year, earning 5% interest, will be worth £105 after one year; therefore, £100 paid now and £105 paid exactly one year later both have the same value to a recipient who expects 5% interest. That is, £100 invested for one year at 5% interest has a future value of £105. This notion dates back at least to Martín de Azpilcueta of the School of Salamanca. This principle allows for the valuation of a likely stream of income in the future, in such a way that annual incomes are discounted and then added together, thus providing a lump-sum "present value" of the entire income stream; all of the standard calculations for time value of money derive from the most basic algebraic expression for the present value of a future sum, "discounted" to the present by an amount equal to the time value of money. For example, the future value sum to be received in one year is discounted at the rate of interest to give the present value sum :
Numerology
Chaldean Numerology
The numerical value of time value of money in Chaldean Numerology is: 9
Pythagorean Numerology
The numerical value of time value of money in Pythagorean Numerology is: 3
Translations for time value of money
From our Multilingual Translation Dictionary
- धन का सामयिक मूल्यHindi
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"time value of money." Definitions.net. STANDS4 LLC, 2024. Web. 26 Apr. 2024. <https://www.definitions.net/definition/time+value+of+money>.
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