TIME VALUE OF MONEY

Time value of money

Time Value of Money

Question No. 1

Importance of Present Value

This concept of present value is important because it is used in the context of economics and public finance. Present value shows the current value of a capital that is not immediately required is (as opposed to value) the amount, placed at compound interest until maturity, would become equal to that amount at the time of payment. It is commonly known as the value of money in function of time.

Furthermore, present value is essential to teach because it is an amount to be received ...