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Describe the time value of money. If you were offered $900 now or $1,000 one year...

Describe the time value of money. If you were offered $900 now or $1,000 one year from now, which would you choose and why?

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Answer #1

Time value of money means that there is a depreciation in the value of money because of passage of the time, so this depreciation in the value could be attributed to the factors like inflation and other interest rates.the same amount of money today will be valued higher than the same amount of money tomorrow.

So I will be accepting $900 now, because I think that I can make more than 10% on this receipts, and this will be greater than $1000 one year after, so I would be investing and making the return higher education as I have the flexibility of receiving the money instantly so I would be receiving the money instantly rather than receiving it one year after.

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