session 7 - Time Value of Money(Preparation for Liabilities...

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Time Value of Money (Preparation for Liabilities) Session 7
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Time Value of Money The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. If you invest $100 today with 5% interest, you will receive $105 after one year. Therefore, $100 paid now and $105 paid exactly one year from now both have the same value to the investor who assumes 5% interest rate. In other words, $100 invested for one year at 5% interest has a future value of $105. Also, $105 one year from now has a present value of $100.
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