Financial Management uses the concept of Time Value of Money very frequently to compare different types of investments like the rate of returns on bonds and securities. It is also used to evaluate different loans, leases, mortgages and savings in addition to investing in fixed assets also which generate income. (Croome, 2003).
TVM is a concept based on the idea that a dollar today would be worth more than the possibility or prospect that one can get a dollar sometime in future. The philosophy is that if the money is not spent, but saved instead then there should be return for keeping the money.
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