If all goes well, the venture funded by the bond offering nets the company more income than it cost it to issue the bonds.
Conclusion
The Time Value of Money is an important concept in financial management. Money left on its own is devalued by inflation. Investors, therefore, need to find way to make their money grow faster than the rate of inflation. One method is through interest paying investments. Compounding interest accelerates return on investment, provided an investor can obtain a fixed rate of interest. Another method, bonds, offer a steady income and can be bought or sold during their lifetime. Whichever method an investor chooses, understanding the time value of money is crucial to successful investment outcomes.
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