How does Time Value of Money in conventional finance compare to the Islamic perspectives of time...

How does Time Value of Money in conventional finance compare to the Islamic perspectives of time value of money?

Expert Solution

As per Time value of money the sum of money now you have in your hands are more worth than same sum of money you receive in the future. This concept is related to inflation and purchasing power. Conventional time value of money is prohibited by islamic law as it is from the concept of interest. From the economic perspective the time value of money is same in conventional and islamic finance. As there is an element of money producing money is prohibited as per islamic law. The major components of time value of money are rates,time periods, present value, future value, and payment. There is change in Shari'ah Islam and conventional finance on TVM. As per Islamic finance money is not treated as a commodity.

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