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

The principle of the time value of money is grounded in the idea that a specific amount of money today holds greater value than the same amount in the future. This is due to several factors, such as the potential earning capacity of money. When you have money today, you can invest it to earn returns, which could increase the total value of that money over time. Additionally, inflation diminishes the purchasing power of money in the future, meaning that the amount you have today will likely buy more in goods and services compared to the same amount in the future.

Therefore, the statement that money available today is worth more than the same amount in the future effectively captures the essence of the time value of money, highlighting both the opportunity cost of capital and the effects of inflation.