A dollar received today is worth
A)less than a dollar received in the future discounted at 12% interest.
B)more than a dollar received at any time in the future.
C)less than a dollar received in the future if the current interest rate is lower than the anticipated future interest rate.
D)a dollar times the future value interest rate.

Question

Quizplus · Accepted Answer

The value of money decreases over time due to inflation and the opportunity cost of not being able to invest it. Therefore, a dollar received today is worth more than a dollar received in the future because it can be invested to earn interest, making its future value greater than a dollar received in the future.

A Dollar Received Today Is Worth