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why do we need to consider the concept of time value of money?

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why do we need to consider the concept of time value of money?
Answered Same Day Dec 22, 2021

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David answered on Dec 22 2021
116 Votes
Time value of money
Why do we need to consider the concept of time value of money?
Time value of money concept tells us about the diminishing value of money which is caused due
to many factors such as inflation, rising interest rates etc. Time value of money concept is very
useful in capital budgeting techniques, without the time value of money concept the capital
projects cannot be evaluated appropriately.
There are various capital budgeting techniques which uses the time value of money concept.
NPV and IRR are two capital budgeting techniques that are mostly used to evaluate the projects.
Usually the result provided by both of them is same but in some cases the result provided by
NPV can differ from result...
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