BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A unit of money obtained today is worth more than a unit of money obtained in future
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A unit of money obtained today is worth less than a unit of money obtained in future
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A unit of money obtained today is worth less than a unit of money obtained in future
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None of the above
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Detailed explanation-1: -The time value of money (TVM) is the concept that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim. The time value of money is a core principle of finance. A sum of money in the hand has greater value than the same sum to be paid in the future.
Detailed explanation-2: -Present value is the sum of money that must be invested in order to achieve a specific future goal. Future value is the dollar amount that will accrue over time when that sum is invested. The present value is the amount you must invest in order to realize the future value.
Detailed explanation-3: -Inflation: In an inflationary economy, the money received today, has more purchasing power than the money to be received in future. In other words, a rupee today represents a greater real purchasing power than a rupee a year after.
Detailed explanation-4: -Economics questions and answers. The “time-value of money” refers to the fact that Multiple Choice a given amount of money becomes more valuable over time. a given amount of money is more valuable the sooner it is obtained.
Detailed explanation-5: -Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value is important to investors and financial planners, as they use it to estimate how much an investment made today will be worth in the future.