The concept that interest causes the value of money received today to be greater than the value of that same amount of money received in the future is referred to as the Time Value of Money.
What is Time Value of Money?
A sum of money is worth more now than it will be at a later time due to its potential for profits in the interim, according to the temporal value of money (TVM) theory. This is a foundational idea in finance. Money that is physically in your possession is worth more than money that will be paid to you in the future. Another name for the time value of money is present discounted value. According to the concept of time value of money, a certain amount of money is worth more right now than it will be in the future. This is so because investment is the only way to make money grow. Any delay in an investment is a missed chance.
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