A basic present value concept is that cash paid or received in the future has less value now than the same amount of cash today.

Question

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This concept is commonly known as the time value of money and is based on the idea that money can earn interest or be invested to earn a return over time. Therefore, a dollar received in the future is worth less than a dollar received today because it could have been invested or used to earn interest in the meantime.

A Basic Present Value Concept Is That Cash Paid or Received