| Time Value of Money | |
 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". |
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 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. |
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 Understanding The Time Value Of Money - Find out why time really is money by learning to calculate present and future value. Forces That Move Stock Prices - You can't predict exactly how stocks will behave, but knowing what forces affect prices will put you ahead of the pack. Anything But Ordinary: Calculating The Present And Future Value Of Annuities - Learn to calculate the present and future value of fixed payments required from you or owed to you. Digging Into The Dividend Discount Model - The DDM is one of the most foundational of financial theories, but it's only as good as its assumptions. |
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