##### Asked by: Magi Meierl

asked in category: General Last Updated: 18th March, 2020# Why does money have a time value quizlet?

**Money has a time value**because funds received today can be invested to reach a greater

**value**in the future. Because inflation tends to erode the purchasing power of

**money**, funds received today will be worth more than the same amount received in the future.

In this regard, why does money have a time value?

Definition: The **time value** of **money** is a financial concept that basically says **money** at hand today is worth more than the same amount of **money** in the future. This is due to the potential the current **money** has to earn more **money**. This is due to the potential the current **money** has to earn more **money**.

One may also ask, what is the time value of money and why is it so important? The **time value of money** (TVM) is an **important** concept to investors because a dollar on hand today is worth more than a dollar promised in the future. The dollar on hand today can be used to invest and earn interest or capital gains.

Furthermore, what is the time value of money quizlet?

**Time value of money** means that a dollar today is **worth** more than a dollar in the future. The current dollar **value** of a future amount—the amount of **money** that would have to be invested today at a given interest rate over a specified period to equal the future amount.

Which of the following examples is the application of the time value of money?

**Time Value of Money Examples**. Now, let's look at **time value of money examples**. If you invest $100 (the **present value**) for 1 year at a 5% interest rate (the discount rate), then at the end of the year, you would have $105 (the future **value**). So, according to this **example**, $100 today is **worth** $105 a year from today.