Time Value of Money

"Time value of money is one of the most basic fundamentals in all of finance. The underlying principle is that a dollar in your hand today is worth more than a dollar you will receive in the future because a dollar in hand today can be invested to turn into more money in the future."

The basic formula for the time value of money is as follows:

PV = FV ÷ (1+I)^N, where:

PV is the present value
FV is the future value
I is the required return

N is the number of time periods before receiving the money

Reference: https://www.fool.com/knowledge-center/time-value-of-money.aspx