What is the 'Time Value of Money  TVM'
The time value of money (TVM) is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
Also referred to as "present discounted value".
BREAKING DOWN 'Time Value of Money  TVM'
Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.
For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.

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Why does time value of money (TVM) assume that a dollar today is worth more than ...
Learn about time value of money, or TVM, and how a present value calculator is used to determine the value of money received ... Read Answer >> 
Why is the time value of money (TVM) an important concept to investors?
Understand why the time value of money is an important concept for investors. Learn when present value and future value calculations ... Read Answer >> 
What impact does inflation have on the time value of money?
Understand the impact that inflation has on the time value of money. Learn what you can do to mitigate the effects of inflation ... Read Answer >> 
How does money supply affect interest rates?
Read about the link between the supply of money and market interest rates, and find out why money supply alone can't explain ... Read Answer >> 
What are the risks involved in keeping my money in a money market account?
Setting aside funds in a money market account can be a safe investment strategy, but investors should be aware of the risks ... Read Answer >> 
What determines the interest rate in my money market account?
Placing funds in a money market account may provide a higher interest rate than a savings account due to the underlying securities ... Read Answer >>