Time Value of Money

Tax Glossary Definition

Time Value of Money

The time value of money refers to the idea that a sum of money has greater economic worth today than it will at a later date. This is because money held now can be invested or put to productive use, allowing it to grow over time.

Example: If you have ₹10,000 today, you can invest it at an 8% annual return, increasing its value to ₹10,800 in one year. Receiving the same ₹10,000 a year later would not offer this growth, so the present amount is more valuable.

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