Which of the following concepts represents time value of money?
A)the concept that money becomes obsolete over time
B)the concept that money earns interest over time
C)the concept that money loses its purchasing power over time
D)the concept that money can be converted into other currencies over time

Question

Quizplus · Accepted Answer

The time value of money concept states that money earns interest over time due to its ability to grow in value when invested or saved. Choice A is incorrect because money becoming obsolete is not related to the time value of money. Choice C is partially correct since inflation can cause money to lose its purchasing power over time, but it is not a complete representation of the time value of money. Choice D is unrelated to the time value of money as it discusses currency conversion.

Which of the Following Concepts Represents Time Value of Money