Final answer:
The concept of time value of money is based on interest earned. Money that is invested has the potential to earn interest over time, increasing its value.
Step-by-step explanation:
The concept of time value of money is based on interest earned. When money is invested, it has the potential to earn interest over time. This means that the value of money today is worth more than the same amount of money in the future due to the earning potential of interest. For example, $100 today can be invested and grow to more than $100 in the future.