Question

All else equal, a dollar received sooner is worth more than a dollar received at some later date, because the sooner the dollar is received the more quickly it can be invested to earn a positive return. True False

Answer 1

Answer:

True

Explanation:

The time value of money involves the relationship of equivalence between cash flows occurring at  different dates.

The later a cash flow is received the less worthier it is as cash flow received earlier than that can be invested to earn return coupled with the fact that the later a cash flow is expected the higher the chances that there would a default on the party of the person making the cash available.

This uncertainty then makes a dollar received sooner worth more than the one received at some later time.