villagelat

petak, 07.01.2011.

The Money Value of Time

You have, no doubt, heard the phrase "the time value of money". It means that a dollar in your hand today is worth more than a dollar in your hand a year from now. Why? Because of what you can do with that dollar over the next year. You can invest that dollar in an interest bearing account and have $1.05 at the end of the year. If you decide to take your buck in a year, your opportunity cost (foregone investment) will be five cents. Not to mention what inflation will have done to your purchasin.

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