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What are the causes of the time value of money

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Question 1:

What are the causes of the time value of money? In other words, why would you prefer to receive $100 today rather than wait and receive $100 one year from now?

Question 2:

Imagine that I promise to pay you either $100 today or some different amount of money one year from now. How much would I have to promise to pay you in one year for you to choose to forego the $100 today and wait one year for the cash? Explain how you came up with the value you would need to receive in order to choose to wait.

Reference no: EM132999023

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