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This will be the compensation for not spending it right now.
For that to happen, some basic concepts of applications will be used. These concepts will be covered at here and also, the components of a discount/interest rates.
Applications of Time Value of Money
To better understand the applications for TVM, first it is important to know the concept for capital market, which is the market where people, companies, and governments with excess of funds, that was saved from regular income, transfer those funds to people, companies or governments with shortage of funds, because they spent more than they expected, promoting economic efficiency, directing capital to productive uses...
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