The time value of money concept works on the principle that a dollar today is worth more than a dollar tomorrow.

Question

Quizplus · Accepted Answer

The time value of money concept is based on the premise that the value of money today is worth more than the same amount of money in the future, due to its potential earning capacity if invested or used for other purposes. This is because there is a risk associated with money in the future - inflation, uncertainty and other external factors can decrease the purchasing power of that dollar in the future. Therefore, it is always better to receive money today rather than in the future.

The Time Value of Money Concept Works on the Principle