Ask Question
BusinessBusiness
11 October, 06:26

According to the time value of money concept

Multiple Choice:

a. a dollar today is less valuable than a dollar to be collected in the future.

b. a dollar today is more valuable than a dollar to be collected in the future.

c. a dollar today and a dollar to be collected in the future are of equal value.

+2
Answers (1)
  1. 11 October, 06:59
    0
    The answer is: B) a dollar today is more valuable than a dollar to be collected in the future.

    Explanation:

    As a concept, the time value of money (TVM), states that money available in the present is worth more than the same amount of money available in the future. That is because of money's potential earning capacity. This is one of the core principles of finance, because money owned today has the capacity of earning interests. So that means that the sooner you receive any amount of money, the more it is worth.

    As an example, today you have $1000 and you decide to invest it in bonds. Your investment will yield a 5% interest rate every year. So at the end the year you will have $1,050. So clearly $1000 today is worth more than $1000 in one year because of the capacity of money earning interest (in this example $50).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “According to the time value of money concept Multiple Choice: a. a dollar today is less valuable than a dollar to be collected in the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
You want to have $1,200,000 when you retire and you are in a defined contribution plan. You can earn 9 percent per year on the money invested and you will retire in 25 years. Your employer also contributes to your plan.
Answers (1)
Tax evasion, or telling lies on your tax return is legal a) true b) false
Answers (1)
Which of the following transactions would NOT be acceptable to the IRS as a means of switching the taxable income to another taxpayer? a. Selling a taxpayer's assets to her business at fair market value b.
Answers (1)
Which of the following statements is NOT a disadvantage of the regular payback method? a. Ignores cash flows beyond the payback period. b. Does not directly account for the time value of money. c.
Answers (1)
Colby Corporation has provided the following information Operating revenues from customers were $199,700. ·Operating expenses forthe store were $111,000. Interest expense was $9,200. Gain from sale of plant and equipment was $3,300.
Answers (1)
New Questions in Business
Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. Refer to Scenario 14-2.
Answers (1)
What is the market structure of MTN
Answers (1)
Hi-Tek is a young start-up company that is currently retaining all of its earnings. The company plans to pay a $2 per share dividend in Year 7 and increase that dividend by 2.2 percent per year thereafter.
Answers (1)
Under the UCC, if a contract does not designate the place of delivery for the goods, then the goods must be made available at a location halfway between the seller's and the buyer's places of business. a) true b) false
Answers (1)
Many people have argued that an income tax should be "marriage neutral," that is, two people should pay the same total tax whether they are married or they are single.
Answers (1)
Home » Business » According to the time value of money concept Multiple Choice: a. a dollar today is less valuable than a dollar to be collected in the future. b. a dollar today is more valuable than a dollar to be collected in the future. c.
Sign Up Forgot Password?