Time Value of Money

The idea that money received today is worth more than the identical amount of money received in the future. This is because money received today can earn interest over time, thus making it worth more in the future. Time value of money is a core principle of finance, and the foundation of various return and valuation metrics used in real estate (e.g. PV, IRR)

For example:

  • 100 USD received today, when grown by 2% per annum, becomes  $110.41 in five years.
  • Thus, 100 USD received in five years is worth less than 100 USD received today
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A.CRE
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AdventuresinCRE.com (A.CRE) was started by Spencer Burton and Michael Belasco during their first year of graduate real estate studies at Cornell University. The site was initially meant to fill a need for readily available real estate financial modeling tools. Today, it is the web's preeminent real estate financial modeling, careers, and education resource.

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