Future value (and the time value of money as a whole) plays an important role in many financial decisions. Individuals use it to forecast how much they will need at retirement, businesses use it when deciding whether or not to invest in capital, and investors use it to value stocks or bonds. As the previous examples showed, the future value provides a useful way of seeing how much can be expected at retirement. While inflation was not factored into the prior examples, the future value of money can be adjusted for inflation and show the real purchasing power of the money. Corporations also use future value and the time value of money to determine whether a specific investment makes financial sense. If a business is looking to expand and purchase a new warehouse or machinery, the time value of money will show what the best investment is or if it is best to do nothing at this time. Lastly, investors can use the time value of money to value a specific investment using an analysis called discounted cash flow. It basically states that an investment’s value today is the present value of all future cash flows (dividends for stocks or interest payments for bonds). The time value of money plays an important role for all individuals—if you bank, borrow, or invest, you are impacted by the time value of money.