According to the Time Value of Money concept, what is true about today's dollar?

The concept of Time Value of Money (TVM) is foundational in finance and economics, emphasizing the principle that a dollar today is worth more than a dollar in the future. This is primarily due to the potential earning capacity of money. When you have a dollar today, you can invest it and earn interest or other returns over time, leading to a greater amount in the future.

The reason today's dollar is considered more valuable lies in several factors, including inflation, opportunity cost, and the risk inherent in future cash flows. Inflation erodes the purchasing power of money over time; thus, a dollar spent in the future will typically buy less than a dollar spent today. Additionally, by investing the dollar today, you can generate returns, meaning it has the potential to grow.

Therefore, it is accurate to assert that today's dollar is worth more than tomorrow's dollar, as it opens up opportunities for growth and is less affected by inflation's diminishing effect on purchasing power.