Which of the following statements is INCORRECT based on the time value of money?
A) In general, money today is worth more than money in one year.
B) We define the risk-free interest rate (rf) for a given period as the interest rate at which money can be borrowed or lent without risk over that period.
C) We refer to (1 - rf) as the interest rate factor for risk-free cash flows.
D) For most financial decisions, costs and benefits occur at different points in time.

Question

Quizplus · Accepted Answer

The correct interest rate factor for risk-free cash flows is (1 + rf), not (1 - rf). The other three statements are correct based on the time value of money.

Which of the Following Statements Is INCORRECT Based on the Time