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This is based on the premise that cash in hand today is more valuable than the same amount in the future due to its capability of earning interest. For investors, this is single most important concept in the world of finance. This paper will discuss the different financial applications of the time value of money. This paper will also describe the components of interest and highlight various methods of calculating time value of money using different interest scenarios.
Financial Applications of the Time Value of Money
Time value of money has many useful applications. One of the most important uses is that it helps to measure the trade-off in spending and saving...
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