Question
Which best explains the concept of time value of money?
© Inflation means it is better to spend money now than invest it for the future,
• Borrowing money is a good idea because you are able to pay it off over time
© Taking additional time to pay off debt means lower interest and more flexibility
• Money received now is worth more than the same amount received in the future.
Answer
Money received now is worth more than the same amount received in the future. This is because of the time value of money, which takes into account the potential earning power of money over time due to factors such as inflation and interest rates.