The time value of money refers to:
A)opportunity costs such as time lost on an activity.
B)financial decisions that require borrowing funds from a financial institution.
C)changes in interest rates due to changes in the supply and demand for money in our economy.
D)increases in an amount of money as a result of interest earned.
E)changing demographic trends in our society.

Question

Quizplus · Accepted Answer

The time value of money concept posits that a dollar today is worth more than a dollar in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. Option D directly refers to this concept by mentioning the increase in the amount of money as a result of interest earned.

The Time Value of Money Refers To