The time value of money is created by
A) the existence of profitable investment alternatives and interest rates.
B) the fact that the passing of time increases the value of money.
C) the elimination of the opportunity cost as a consideration.
D) the fact that the value of saving money for tomorrow could be more or less than spending it today.

Question

Quizplus · Accepted Answer

The time value of money is created by the fact that there are profitable investment alternatives and interest rates. Money today is worth more than money in the future because it can be invested to earn positive returns. The passing of time alone does not increase the value of money, and the opportunity cost remains a consideration in making financial decisions. The value of savings and spending can also vary depending on economic conditions, further emphasizing the importance of considering the time value of money.

The Time Value of Money Is Created by