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The time fee of money (TVM) is the concept that a sum of cash is really worth more now than the same sum will be at a future date due to its earnings possible in the interim.
The time price of money is a core precept of finance. A sum of cash in the hand has higher cost than the same sum to be paid in the future.
What do you call a idea that states an quantity of money today is worth extra than that identical quantity in the future?
Understanding Present Value (PV)
Present cost is the idea that states an amount of money today is really worth greater than that same amount in the future. In other words, money acquired in the future is no longer worth as an awful lot as an equal amount acquired today. Receiving $1,000 nowadays is well worth greater than $1,000 5 years from now.
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