What is the time value of money?
- A Money loses value only during inflation
- B A rupee today is worth more than a rupee tomorrow because it can be invested
- C All money has the same value regardless of timing
- D Money gains value only in a bull market
Answer
A rupee today is worth more than a rupee tomorrow because it can be invested
The core principle of finance. Because money can earn a return, cash received sooner is worth more, which is why future cash flows must be discounted.





