## Time Value of Money — Introduction
### Core Idea
The Time Value of Money (TVM) is a fundamental financial concept which states that:
> A rupee available today is worth more than a rupee available in the future.
The same nominal amount of money is more valuable the sooner you receive it, because money in hand today can be invested to earn a return.
### Why TVM Matters
Understanding TVM is essential for making informed financial decisions whenever money is received or paid over a period of time, such as:
- Investments — deciding where to put your money
- Loans — evaluating borrowing/lending terms
- Any situation involving cash flows spread across different points in time
### What TVM Lets You Do
TVM gives you a common basis to compare cash flows occurring at different points in time. Since ₹100 today and ₹100 a year from now are not equivalent, you cannot simply add or compare them directly — you must first bring them to a common point in time using TVM techniques.
### Key Takeaway
TVM is a core principle of finance and the foundation for sound financial decision-making. Almost every later topic (cost of capital, capital budgeting, valuation, dividend decisions) rests on this single idea: cash flows must be adjusted for when they occur before they can be compared.