The concept of the time value of money indicates that:

Question

Quizplus · Accepted Answer

The time value of money refers to the idea that a dollar received today is worth more than the same dollar received in the future because of its potential earning capacity. This is due to inflation, interest rates, and other economic factors. Therefore, option D is the correct answer. Option A is incorrect because some investments may produce a return in a short time period. Option B is incorrect because fluctuating prices do not necessarily relate to the time value of money. Option C is also incorrect because the sophistication of monetary systems is also unrelated to the concept of time value of money.

The Concept of the Time Value of Money Indicates That