Time Value of Money

“Things change with Time”. This saying that holds true for almost everything is also applicable to the money that someone possesses. And this change in the value of the money with changing time is what we call ‘time value of money’. But, investing this money in the first place is mandatory for it to have some value to start with.

The term investment when used with respect to money simply means- borrowed money or money lent to someone. Clearly, only the money that is invested in the form of a loan has some worth, worth that changes with respect to time. The tools that we need to evaluate this change are what we are going to learn about in this chapter!

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