Time Value of Money Paper To understand how to manage money, it is important to know the time value of money. Time Value of Money (TVM) is the simple concept that a dollar that someone has now is worth more than the dollar that person will receive in the future, this is because the money that person has today is worth more because it can be invested and earn interest (Web Finance, Inc., 2007). The following document will explain how annuities impact TVM issues and investment results. Issues that impact TCM will also be discussed: interest rates and capitalization (with two issues), present value, future value, opportunity cost, annuities, and the '72 rule. The idea of ​​TVM allows managers or investors the ability to understand the benefits and future cash flows of the cost of an investment or project. TVM is an important concept in financial management. It can be used to compare investment alternatives and to solve problems regarding loans, mortgages, rentals, savings and annuities (Getobjects.com, 2004). "Interest is the cost of borrowing money. An interest rate is the cost expressed as a percentage of the amount borrowed per period of time, usually one year" (Getobjects.com, 2004). The interest rate is a very important factor in all financial decisions. The two types of interest rates are simple and compound (Brealey, Myers & Marcus, 2003). A simple interest rate, for example, occurs when a person borrows money from a lender and will have to pay the lender a fee, this fee is the simple interest rate (Brealey, Myers & Marcus, 2003). Simple interest is normally used for a single period of less than a year, such as 30 or 60 days [simple interest = pxixn] (Getobjects.com, 2004). For example... half of the document... Retrieved May 26, 2007, from http://www.getobjects.com/Components/Finance/TVM/iy.htmlGetobjects.com. (2004). Value of annuities. Retrieved May 26, 2007, from http://www.getobjects.com/Components/Finance/TVM/pva.htmlBrealey, R. A., Myers, S. C. & Marcus, A. J. (2003). Fundamentals of Corporate Finance, 4e. [University of Phoenix Custom Edition Electronic Text]. The McGraw-Hill Companies. Retrieved May 26, 2007, from University of Phoenix, rEsource, FIN 325—Financial Analysis for Managers II Course Web site.Investopedia ULC. (2007). Utility-price. Retrieved May 26, 2007, from http://www.investopedia.com/terms/o/opportunitycost.aspWikipedia. (2007). Rule of '72. Retrieved May 26, 2007, from http://en.wikipedia.org/wiki/Rule_of_72Dobbs, M. L. (2007). Lazy Money "The Rule of 72". Executive benefits strategies. Retrieved May 26, 2007, from http://www.mldobbs.com/