Which of the following concepts represents time value of money?
A)the concept that money becomes obsolete over time
B)the concept that money earns income over time
C)the concept that money loses its purchasing power over time
D)the concept that money can be converted into other currencies over time

Question

Quizplus · Accepted Answer

The concept of time value of money states that money earns income over time. This means that money has the potential to grow in value through interest or investment, and therefore, a dollar today is worth more than a dollar in the future. Option A is incorrect because money does not become obsolete over time, but it may lose its value due to inflation (Option C). Option D is not related to the concept of time value of money.

Which of the Following Concepts Represents Time Value of Money