If the interest rate is greater than zero, then the concept of present value is that a dollar today:
A)is worth more than a dollar a year from now.
B)is worth less than a dollar a year from now.
C)will be worthless a year from now.
D)is worth the same as a year from now.

Question

Quizplus · Accepted Answer

When the interest rate is greater than zero, a dollar today is worth more than a dollar a year from now because the dollar can be invested and earn interest over the year, making it worth more in the future. This principle is the foundation of the concept of present value.

If the Interest Rate Is Greater Than Zero, Then the Concept