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Class Notes 2

The time value of money (TVM) asserts that money available today is more valuable than the same amount in the future due to its earning potential, forming the basis for discounted cash flow (DCF) analysis. Key formulas related to TVM include present value (PV), future value (FV), net present value (NPV), and internal rate of return (IRR). Applications of TVM principles span bond pricing, stock valuation, capital budgeting, and retirement planning.

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9 views2 pages

Class Notes 2

The time value of money (TVM) asserts that money available today is more valuable than the same amount in the future due to its earning potential, forming the basis for discounted cash flow (DCF) analysis. Key formulas related to TVM include present value (PV), future value (FV), net present value (NPV), and internal rate of return (IRR). Applications of TVM principles span bond pricing, stock valuation, capital budgeting, and retirement planning.

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rowed92414
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Finance Class Notes - Time Value of Money

The time value of money (TVM) states that a sum of money is worth more today than the same sum
in the future, due to its potential earning capacity. This principle is the foundation of discounted
cash flow (DCF) analysis.
Key formulas include present value (PV), future value (FV), net present value (NPV), and internal
rate of return (IRR).

Applications: bond pricing, stock valuation, capital budgeting, retirement planning.

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