Time value of money

Time value of money
The value of a unit of money is different in different time periods. The value of a sum of money received today is more than its
value received after some time. In other words the sum of value of money can also be referred to as time preference for money. Time preference of money is found in reinvestment opportunity for the founds which are received earlier. It is the rate of return. This will vary from individual to individual.
EXAMPLE : - If one has option to receive 10000 now or one year after than one would like to receive 10000 now only. If some one receive it after one year than he would like to receive 10500 which may be rate of return for that person. In this cases the time value of money will be 500Rs. or 5%
TECHNIQUES : -
(1) Compounding
(2) Non compounding