Have you ever noticed that The value of DOLLAR or your home currency is changing day by day ? Have you think that when your grandpa was affordable to buy a land only for $1000 but nowadays the cost of that land is almost $20000 ?
Why ?
Because, Time has gone and the value of Currency has been reduced. For this reason, the concept of Time Value of Money has been produced. Or, We can say at another way that Time Value of Money concept is effective on money when it talks for a period.
When time changed and the value of money changed, it is called Time Value of Money(TVM).
Different Authors defines Time Value of Money as...
I M Pandey sated
E A Kolb said that
Benton said about Time Value of Money
Since a present amount of money is more valued rather than a future amount of money , an individual naturally chooses to take the present amount of money at present time.
So, A specific amount of money is more valuable in present than future time. Conversely, A specific amount of money is less valuable in future than present time. And This concept is called Time Value of Money or TVM.
Why ?
Because, Time has gone and the value of Currency has been reduced. For this reason, the concept of Time Value of Money has been produced. Or, We can say at another way that Time Value of Money concept is effective on money when it talks for a period.
When time changed and the value of money changed, it is called Time Value of Money(TVM).
Different Authors defines Time Value of Money as...
I M Pandey sated
An individual's preference for possession of a given amount of cash now rather than the same amount at some future time called time preference for money
E A Kolb said that
Time value of money refers to the fact the same money return has a higher present value if it is to be received early than it is to be received later
Benton said about Time Value of Money
The principle that money received in the present is worth more than the same amount received in the future
Since a present amount of money is more valued rather than a future amount of money , an individual naturally chooses to take the present amount of money at present time.
So, A specific amount of money is more valuable in present than future time. Conversely, A specific amount of money is less valuable in future than present time. And This concept is called Time Value of Money or TVM.
