time value of money

Definition

The idea that a dollar now is worth more than a dollar in the future, even after adjusting for inflation, because a dollar now can earn interest or other appreciation until the time the dollar in the future would be received. This theory has its base in the calculation for present value.

Use time value of money in a sentence

I did not agree with the time value of money because I felt like it was trying to get me to spend it.

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The time value of money was an especially critical concept to understand as an interest rate could always be earned.

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Hannah was not very adept at keeping a savings, because she invested everything due to her unquestioning adherence to the time value of money.

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