ocr: The Time Value ofMoney. The time value of money IS an important concept which underpins both the NPVand! IRR techniques. AI rational person would rather receive ET00 today than in one year's time because they would realise that the present value of £100: - is greater than the future value of that same E100. hen we look at the tuture cash tlows that will arise trom an - investment project we need to discount these cash flows in order to express them in terms of present values. We shall now look at the mathematics necessary to make tuture cash flows equivalent to their present values.
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