1. Introduction

"The sooner you start saving, the more time your money has to grow."

As simple as it sounds, this popular wisdom is the basis of one of the key pillars of finance—the Time Value of Money. Put differently, a dollar today is more valuable than a dollar in 1 year. The reason is that if you have a dollar today, you can invest it such that it earns interest over the next year. At the end of this investment period, you will hold a dollar plus interest, which is more than a dollar, as long as the interest rate is positive. 

This section takes a closer look at time travelling with money. The key question we address is: How to determine the future value of an investment that we make today?