The use of natural resources in an economic activity involves setting up a project forharvesting (i.e. extracting) these resources. For the project to be viable, both economic andfinancial indicators - such as net present value (NPV) and internal rate of return (IRR)considering time value of money - are employed. a) Briefly explain the concept of "time value of money".  b) Moreover, explain how you will use NPV and IRR to determine the viability of a project.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The use of natural resources in an economic activity involves setting up a project for
harvesting (i.e. extracting) these resources. For the project to be viable, both economic and
financial indicators - such as net present value (NPV) and internal rate of return (IRR)
considering time value of money - are employed.

a) Briefly explain the concept of "time value of money". 

b) Moreover, explain how you will use NPV and IRR to determine the viability of a project.

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