The time value of money (TVM) compares present cash outlays to future expected returns.

Question

Quizplus · Accepted Answer

The statement accurately describes the concept of time value of money, which takes into account the fact that money available today is worth more than the same amount of money in the future due to factors such as inflation and potential earnings from investment. By comparing the present value of cash outflows to the future value of expected returns, investors can make more informed decisions about the profitability and feasibility of different investment opportunities.

The Time Value of Money (TVM) Compares Present Cash Outlays