In the 1985 movie, Back to the Future, what happens to the amount of cash the time travelers have in their pockets if the time value of money applies or does not apply? Use $100 to quantify
Answered Essay: In the 1985 movie, Back to the Future, what happens to the amount of cash the time travelers have in their pockets if the time
Expert Answer
Time value of money is a idea that says that present worth of money is more than its future value due to its potential earning capacity .
In other words $ 100 at present is worth more than if same $ 100 is received in future .
say ,You have an option to receive $ 100 today or $ 100 in future
Situation 1)The value of $ 100 after one year will be 100(1+.06)= $106 if you invest it in bank @6 % for one year at present
Situation 2) You will received $ 100 after one year .so you will have $ 100 after one year
This is called time value of money where if you invest your money ,your amount will increase.
Present scenario :
If the time travelers keep their money in pocket rathe than investing somewhere or depositing in bank ,the value of cash that they have in their pocket will remain same.
However if they choose to keep or deposit the money in bank or invest it somewhere ,there amount of cash will increase.
