Time Value Of Money The Payback Amount For $ 100,0

Time Value of MoneyThe payback amount for $ 100,000 mortgage at an interest rate of 5 percent for 15 years is $ 142,343. That is the interest amount over the 15 year period is $42,343. Similarly the same amount at the same interest rate for a period of 30 years attracts an interest amount of $ 92,256 or payback of $ 192,256. The principal sum and the interest rate are exactly the same. This means the reason for the difference is time. When the time is doubled the interest paid almost doubles too. From the time value of money perspective this means that $100,000 today is worth $142,343 in 15 years and 192,256 in 30 years. The longer it takes to receive an amount of money the more value it loses. Thus money that is available at the present is more valuable than a similar amount in the future due to the interest earning potential.My next big negotiationis a mortgage. My new knowledge in time value of money tells me that the reason money today is worth more than money in the future is that money in hand is a sure thing. There is no risk that it will