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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4473
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Explain the time value of money. Is it important for accountants

Customer Question

Explain the time value of money. Is it important for accountants to have an understanding of compound interest, annuities, and present and future value concepts
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

 

The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. 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.

 

It is certainly important for the accountants to have an understanding of compound interest, annuities and present value and the future of value concepts while doing any feasibility study of any project / transaction or in any given business environment.

 

I am sure this would help...

Warm Regards,

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