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Time-Value of Money Principle: Present Value

The time-value of money principle states that 100 Euro received today is worth more than 100 Euro received at some date in the future. Hence, if one is given a choice, one should always opt to receive the money now rather than in the future.

This is due to the fact that the 100 Euro received today can be invested immediately and start earning interest. If I receive 100 Euro today, I can buy an…