The time value of money has been called the single most important concept in financial planning. It is the value of a sum of money, or a series of payments, at another point in time. For example, the future value of $1,000 that is placed in a 12-month certificate of deposit (CD) a year from now will be greater than $1,000 because the CD will earn interest. The three key factors in a time value of money calculation are the interest rate, the amount of time, and the starting or ending dollar amount.
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