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6 November, 23:41

The time value of money suggests that $1 in one year from now is worth less than $1 today. True / False.

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  1. 6 November, 23:49
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    False, we conclude that $1 in one year from now is worth more than that of today.

    Explanation:

    The time value of money (TVM) is concept that suggests money available at present time is worth more than identical sum in future due to potential earning capacity.

    This core principle in finance holds that the provided money can earn interest, and any amount of money is worth more the sooner it is received.

    Also future money is not affected by inflation, only present money is.

    Hence we conclude that $1 in one year from now is worth more than that of today.
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