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Financial Planner

Category - General Principles of Financial Planning

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Which of the following is true regarding the time value of money?

Money received today is worth the same as money received in the future.
Money received today is worth more than money received in the future.
Money received today is worth less than money received in the future.
Money received today is worth more than money received in the future if it is less than $1,000. If it is more than $1,000, it is worth less than money received in the future.

Explanation

Answer: B - Because money received today can be invested, it is seen as worth more than money received in the future. Time value of money is one of the primary calculations you should use in helping a client with financial planning.

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