Which of the following statements about the time value of money is true?
A) The value of a dollar invested at a positive interest rate decreases over time.
B) The further in the future you receive a dollar, the less it is worth today.
C) A dollar in hand today is worth less than a dollar to be received in the future.
D) The higher the rate of interest, the more likely an investor will elect to consume at present and forgo invest his funds.

Question

Quizplus · Accepted Answer

The principle of the time value of money states that a dollar today is worth more than a dollar in the future due to its potential earning capacity. This is captured by statement B, which correctly notes that the further in the future you receive a dollar, the less it is worth today, reflecting the concept of present value.

Which of the Following Statements About the Time Value of Money