The Main Concept of Time Value of Money Is

question 68

Multiple Choice

The main concept of time value of money is:

• A) that cash flows received in the distant future are not as valuable as cash flows received in the near future.
• B) the recognition of all relevant costs in absolute dollars.
• C) that cash flows received in different years should be treated as equal.
• D) that cash payments made in the future have the same value today.

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Definitions:

Foreign Currency Approach

A method that involves evaluating financial statements and investments in the context of foreign currency exchange rates and their fluctuations.

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment by calculating the present value of expected future cash flows.

Yen Investments

Investments denominated in Japanese yen, can involve securities, bonds, or other financial instruments within the Japanese market.

Home Currency Approach

A method used in international finance to evaluate investments by converting all values to one's own currency.