The time value of money is considered in long-range investment decisions by
A)assuming equal annual cash flow patterns.
B)investing only in short-term projects.
C)assigning greater value to more immediate cash flows.
D)ignoring depreciation and tax implications of the investment.

Question

Quizplus · Accepted Answer

The time value of money recognizes that a dollar received today is worth more than a dollar received in the future because of the potential to earn interest or returns by investing that dollar now. Therefore, long-range investment decisions should assign greater value to more immediate cash flows that can be invested to earn additional returns over time. Options A and B do not consider the time value of money, and D is incorrect because depreciation and tax implications should be considered in long-range investment decisions.

The Time Value of Money Is Considered in Long-Range Investment