Time Value of Money

The Time Value of Money is the terminology used to describe the idea that an amount of money in the present is worth more than that same amount of money in the future. This happens due to the availability of interest. Depending on prevailing interest rates, $100 today will be worth over $100 at a later date. Similarly, if you were to receive $100 at a later date, it would be worth less than $100 in present day terms.