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What is the time value of money? a. The monetary value of a project’s future net...

What is the time value of money?

a. The monetary value of a project’s future net cash flows at time zero.

b.Funds received today are worth less than the same amount received in the future because of depreciation.

c.monetary value of accountants’ time spent on a project.

d.Funds received today are worth more than the same amount received in the future because those funds could be invested today and earn interest in the interim.

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Answer #1

Solution: The answer is d.Funds received today are worth more than the same amount received in the future because those funds could be invested today and earn interest in the interim.

Explanation: The money you have now is worth more than the identical sum in the future due to its potential earning capacity. For example, if you invest $1,000 (the present value) for 1 year at a 10% interest rate (the discount rate), then at the end of the year, you would have $1,100 (the future value). So, according to this example, $1,000 today is worth $1,100 a year from today.

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