Time Value of Money Paper
interest over two years is $3,000 + $3,180 = $6,180.
Money has a time value and the value today of future cash flow is referred to as the present value (Brealey, Myers & Marcus, 2003). The present value of a future amount is worth less the longer one waits for it (Brealey, Myers & Marcus, 2003). "The future value is the amount of money that an investment made today (the present value) will grow to by some future date. Since money has time value, we naturally expect the future value to be greater than