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In addition, while exploring the concept of annuities, one will notice other factors. Factors such as, interest rates, present and future value and the rule of 72; which ultimately contribute to the impact in time value of money.
The best and easiest way in explaining the importance in time value of money is the scenario where by pretense that one has won the lottery. The scenario retrieved from investopedia.com and written by Shauna Croome denotes, "Congratulations!!! You have won a cash prize! You have two payment options: a) Receive $10,000 dollars now. Or b) Receive $10,000 dollars in three years?which option would you choose?" (2003)...
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