Most financial transactions involves a series of cash flows - regular or irregular - over a period of time. When evaluating these cashflows the basic concept used is the time value of money. If you are offered the choice between having £100 today and having £100 at a future date, you will usually prefer to have £100 now. If the choice is between paying £100 now or paying the same £100 at a future date, you will usually prefer to pay £100 later. Cash today is almost always worth more than the same amount of cash later and for this reason - among others - if you lend someone money you expect to receive interest until the loan is repaid.

The income that can be gained over time by holding money, such as interest income or dividends.

The principle that an amount of money anticipated as income in the future is always worth less than an equal amount in hand at the present time.

The concept that a dollar in hand today is worth more than a dollar that will be received in some future year.

The principle that money received in the present is worth more than the same amount received in the future. The concept, used as the basis for discounted cash flow calculations that cash received earlier is worth more than a similar sum received later, because the sum received earlier can be invested to earn interest in the intervening period. For the same reasons, cash paid out later is worth less than a similar sum paid at an earlier date.

The idea that money is worth more if received sooner rather than later.... more on: Time value of money

The concept that a dollar today is worth more than a dollar received in the future; it exists as long as one can earn a positive rate of return (interest rate) on investments.

the idea that a dollar today is worth more than a dollar tomorrow; this is particularly important during inflationary times

the value of an amount of money at a particular time is whatever the money is worth at that time, given an interest rate or cost of capital.

concept that acknowledges that money change value over a period of time; that a sum of money today is worth more that the same sum of money at a future date, because of the fact that the money received now can be invested to earn interest. [D03357] PMDT

is the idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.

Used informally to refer to the fact that the present value of future cash flows decreases with the amount of time until they are to be received.

Timeliness Times interest earned ratio

the fact that a dollar today is worth more than a dollar in the future is called the time value of money

Concept that addresses the way the value of money changes over a period of time.

The concept requiring that a rate of return be assigned to capital invested over a period of time.

A financial concept stating that a dollar received today is worth more than a dollar to be received in the future.

This is a concept that your money is worth more today than it is tomorrow. If you have a dollar in your pocket and hold on to it for five years, it will be worth less in the future than it is now. Waiting to collect monies over a period of time diminishes the value of your money. Yes, you would earn steady income over a period of time, but chances are the value of that cash you will receive, in future dollars, will be less in purchasing power when you compare what you can buy with it today.

Money today is worth more than in the future because of interest rates.

The value derived from the use of money over time as a result of investment and reinvestment. This term may refer to either present value or future value calculations. The present value is the value today of an amount that would exist in the future with a stated investment rate called the discount rate. For example, with a 10% annual discount rate, the present value today of $110 one year from now is $100. Future value is the value in the future of a known amount today with a stated investment rate. For example, with a 10% annual investment rate, the future value in one year of $100 today is $110. In either case, the interest rate used reflects the lost opportunities for return from alternative investments.

The concept that, over time, you should earn interest on your money. Paying money up front in a transaction, adds to the cost of the transaction, since you could have earned interest on that money had you kept it and invested it yourself.

The recognition that a dollar in the present is more valuable than a dollar in the future. Present-value calculators and present-value tables assist in converting future dollars to the present value in order to make a prudent decision. To learn more, see Explanation of Evaluating Business Investments. To Top

Claim to one dollar in the present is valued differently to a claim to one dollar in the future because the former can be reinvested at the prevailing interest rate.

A dollar received today is worth more than a dollar received in the future, because today's dollar can earn interest up to the time the future dollar is received. Conversely, a dollar to be received in the future is worth less than a dollar received today because (1) inflation between now and when the future dollar is received will reduce the purchasing power of that future dollar, and (2) the future dollar cannot earn interest until it is received. Therefore, provided it can earn interest, any amount of money is worth more the sooner it is received. For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year. On the other hand, $100 received one year from now is only worth $95.24 today, at the same 5% interest rate.

This refers to the effect of time and compounding interest on a sum of money which substantiates the fact that a dollar invested today is worth more than a dollar received a year from now.

A concept that money available now is worth more than the same amount in the future because of its potential earning capacity.

The basic principle that money can earn interest, therefore something that is worth $1 today will be worth more in the future if invested. This is also referred to as future value.

The use of money has a cost or value just as other commodities do. Interest is that cost. As time elapse there is cost to using money. The sooner money is received the more valuable it is because it can be invested an earn interest.

General] the principle that an amount of money available at an earlier point in time has different usefulness and value than the same amount of money at a later point in time

An expression of the ability of money to earn interest, the total potential for which is a function of the principal amount, the applicable interest rate and the time period involved.

Concept that the value of money is linked to time because of its capacity to earn interest over time. Thus, a given amount of money available today is worth more than a given amount of money to be received tomorrow, because the amount available now can be invested immediately.

1) The cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds. See: future worth, present value. 2) The interest rate that capital is expected to earn.

The value of a future sum of money if it is paid today.

The concept that money today is worth more than the same amount in the future, when inflation has reduced its value.

An economic principle recognizing that a dollar today has greater value than a dollar in the future because of its earning power.

The difference in spending power between receiving a sum of money today compared to receiving it in the future.

The time value of money (TVM) is a way of calculating the value of a sum of money, at any time in the present or future.