Question

The concept of time value of money refers to

		the timing of a cash flow does not matter
		the fact that most people prefer money later, rather than earlier
		the timing of a cash flow matters
		cash flows can be compared directly even if they occur at different times

Answer 1

The time value of money states that a $1 received today is more valuable than a $1 tomorrow or in a year. This is because there will be discounting in the future value to find the present value. Hence, the correct option is-

The timing of a cash flow matters

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