The main idea behind the time value of money is that a dollar today is worth more than a dollar in the future because ________.
A)inflation erodes the value of money over time
B)investors can earn a return on money they have today and thereby have more money in the future
C)the future is more uncertain than the present
D)investors are impatient

Question

Quizplus · Accepted Answer

The time value of money is based on the concept that money available today is worth more than the same amount in the future because it can earn interest or be invested to earn a return. Therefore, option B is the correct answer. Inflation (option A) can erode the value of money over time, but this alone is not the main idea behind the time value of money. Option C and D are incorrect as they do not relate to the concept of the time value of money.

The Main Idea Behind the Time Value of Money Is