If an investor had a choice of receiving $1000 today, or $1000 in five years, which would the average investor prefer?
A)$1000 in five years because they are not good at saving money
B)$1000 today because it will be worth more than $1000 received in five years
C)$1000 in five years because it will be worth more than $1000 received today
D)Investors would be indifferent to when they would receive the $1000

Question

Quizplus · Accepted Answer

The average investor would prefer to receive $1000 today because of the time value of money. Waiting five years to receive the same amount means losing out on the opportunity to invest that money today and earn returns on it. Additionally, inflation may decrease the value of $1000 in five years, whereas receiving it today ensures its current purchasing power.

If an Investor Had a Choice of Receiving $1000 Today