What does the time value of money mean and why is it important for investors?

What does the time value of money mean and why is it important for investors?

• A. The time value of money means a dollar today is worth more than a dollar in the future because it can earn interest.
• B. A dollar today is always worth the same as a dollar in the future.
• C. The value of money increases over time due to inflation regardless of earning potential.
• D. Time value of money only affects tax planning.

Answer: (A)