The Main Idea Behind the Time Value of Money Is

question 15

Multiple Choice

The main idea behind the time value of money is that:

• A) cash flows received in the distant future are less valuable than cash flows received in the near-term future.
• B) cash received in year 3, say, $80,000, has the same value as $40,000 received in year 3 plus $40,000 received in year 4.
• C) cash flows received in different years are treated as equal in value.
• D) cash payments made in the future have the same value as payments made today.
• E) timing considerations of cash flows have little value in decision making.

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