The Time value of money must be considered in total outlay decision because?
a Cash inflows and out flows occur at different point
b. Inflation greatly reduces the outflows
C. A dollar received in future is more valuable than a dollar today
d. Cash flows are not known with certainty
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Answer:
Option (a) is correct
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The correct answer is (b) Inflation greatly reduces the outflows.
- Time worth of money implies that an amount of money is worth more now than a similar amount of money later on. This is because money can develop just through contributing. A venture postponed is an open door lost.
- Money has time esteem since: Money today is worth more than money tomorrow as far as buying influence. It is plausible of bringing in a hazard-free profit from cash contributed today.
- Money today is worth more than money later on. This is known as the time worth of money. There are three explanations behind the time worth of money: expansion, hazard, and liquidity.
- The time worth of money is how much money that you could procure among today and the hour of a future i n s t a l l m e n t.
- For example, assuming you planned to credit your sibling $2,500 for a long time, you're not simply diminishing your financial balance by $2,500 until you get the money back.
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