Time value of money: Definition from Answers.com Mobile

Time Value of Money (TVM)

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Also referred to as "present discounted value".

Investopedia Says:
Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.

For example, assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.

Related Links:
Find out why time really is money by learning to calculate present and future value. Understanding The Time Value Of Money
Determining monthly contributions to college funds, retirement plans or savings is easy with the TVM calculation. Time Value Of Money: Determining Your Future Worth
At some point in your life you will have to deal with a series of fixed payments over time, so it pays to know how to calculate them. Calculating The Present And Future Value Of Annuities
Don't procrastinate. The timing of your contributions can mean thousands more in savings. For IRAs, Time Is Money
The DDM is one of the most foundational of financial theories, but it's only as good as its assumptions. Digging Into The Dividend Discount Model
Calculate whether the market is paying too much for a particular stock. DCF Valuation: The Stock Market Sanity Check
Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account. Personal Loans: To Lend Or Not To Lend?