Which of the following statements is true about the time value of money?
A)The future value of a single sum will be greater if funds earn 5% instead of 10%.
B)The future value of a single sum will be unaffected by the rate of return at which funds grow.
C)The future value of a single sum will be greater if funds earn 12% instead of 6%.
D)The future value of a single sum will be unaffected by the length of time funds are invested.

Question

Quizplus · Accepted Answer

The time value of money concept states that money received or paid at different times has a different value due to the opportunity cost of not having that money available during that time. Therefore, the future value of a single sum will be affected by the rate of return at which funds grow. The higher the rate of return, the greater the future value of the single sum. The answer choices A and D are incorrect because the first statement is untrue, and the second statement is false as well.

Which of the Following Statements Is True About the Time