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So what is Time Value of Money? It is 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. What this means is that, as long as money can/will earn interest, you would prefer to receive it sooner rather than later.
So, lets look at it this way. Everyone would love to win the lottery, right! The aforementioned principle can be used to determine if it is a better option, (for you), to take the lump sum payout or receive 20 yearly payouts. The big number you see on the billboard that says what you will win is the amount before taxes and based on 20 equal payouts over the next 20 years. This is reffered to as an Annuity.