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23 May, 21:11

The time value of money refers to the issue of:

A. why a dollar received tomorrow is worth more than a dollar received today.

B. what the time required to double an amount of money.

C. why people prefer to consume things at some time in the future rather than today.

D. what the value of the stream of future cash flows is yoda

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Answers (1)
  1. 24 May, 00:32
    0
    D. what the value of the stream of future cash flows is today

    Explanation:

    The times' value of money derives that today value or we can say the present value is more than the value earned at the future or future value because of the earning capacity due to inflation. As inflation rises, consumer spending become less as compare to before

    Just take an example

    If you invest $1,000 today that earns the interest rate at 10% for one year

    So, the present value = $1,000

    And, the future value = $1,000 * 1.1 = $1,100

    So, today value is becoming more worth than the future value

    The formula to compute the future value is shown below:

    Future value = Present value * (1 + interest rate) ^number of years

    Note: The yoda is actually today. It is given wrong
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