Concept of time value of money in definition of Financial Debt – Akzo Nobel India Ltd. Vs. Stan Cars Pvt. Ltd. – NCLT New Delhi Bench Court-II
The time value of money is a concept that a sum of money would worth more on a future date due to its earning potential in the interim. It is a core principle of finance. A sum of money in hand at a given point of time the value of which may be more in the future is also described as discounted value. The money in hand today would have greater value in the future. The increase in value of money on the passage of time is attributed to time and is called time value of money. The investor prefers to receive money today rather than the same amount of money in the future. A sum of money once invested grows over time. If it is not invested the value of money erodes over time. A particular amount of money in hand today will have less buying power when you retrieve it because the inflation reduced its value. The time value of money has a negative relationship with inflation. Inflation is an increase in prices of goods and services.
