MANAGEMENT

Detailed explanation-1: -There are varied reasons for time preference for money. (a) Availability of better investment opportunities. (b) Due to Risk and uncertainty of Cash flows. (c) Due to Inflationary Conditions.

Detailed explanation-2: -The time preference theory of interest, also referred to as the agio theory of interest, helps explain the time value of money. This theory argues that people prefer to spend today and save for later, so that interest rates will always be positive-meaning that a dollar today is more valuable than one in the future.

Detailed explanation-3: -There are three primary reasons for the time value of money-reinvestment opportunities; uncertainty and risk; preference for current consumption.

Detailed explanation-4: -The formula for computing the time value of money considers the amount of money, its future value, the amount it can earn, and the time frame. For savings accounts, the number of compounding periods is an important determinant as well.

Detailed explanation-5: -The exact time value of money is determined by two factors: Opportunity Cost, and Interest Rates.