Why is Time Value of Money Important?

[Suba]

Time value of money or what is known as it is a theory which states that the money we have now will be more valuable than the same amount in the future. So if I have $1000 now it will be more valuable or higher in value than if I have $1000 next year. Time value of money is used as a basic financial concept. One of the factors that affects the value of money is inflation, so the value of $1000 that I have cannot buy the same product if I buy it now. Apart from that, if I currently have $1000, if I invest it or open a business, how much profit will I get?

 

[King Belieal]

Unfortunately, high inflation levels have rendered the time value of money as an obsolete concept. Money loses value so much these days that an amount of money equivalent to $1 now can't buy a quarter of the things it used to buy 2 years ago.

 

[Goldynn89]

This concept seems to on e if the obsolete ones because inflation has rendered money far more valuable in the past than the present. If it had been true, it could have discouraged savings and encouraged investments instead.