Question

1) What's worth more, a dollar today or a dollar tomorrow? Why? 2) Why is it...

1) What's worth more, a dollar today or a dollar tomorrow? Why?

2) Why is it important for you to understand the time value of money?

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Answer #1

1.

A dollar today is worth more than a dollar tomorrow, because the unlimited potential of earning from that dollar today. if you have one dollar today then you can invest that one dollar in bank and earn interest in future.

2.

Time value of money can be defined as relationship between dollar to be received in the future and dollar today. Time value of money is one of the most important and useful concept in finance. time value of money states that the value of one dollar today is more than value of one dollar tomorrow, because the unlimited potential of earning from that dollar today.

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