Final answer:
The statement in the question is false because the time value of money leads to a future value that is typically greater than the present value, assuming a positive interest rate.
Step-by-step explanation:
The concept of the time value of money indicates that money available at present is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received. Therefore, it is not just possible, but also typical, for the future value of a sum to exceed its present value when interest or growth is factored in.
For example, when you invest in a financial instrument like a bond, which carries an interest rate risk, you expect to gain more money in the future due to the interest earned. In the scenario where you purchase a bond at an 8% interest rate, and the market rates rise to 12%, your bond's return is lower compared to the market. However, because you are receiving interest, the future value of your initial investment still grows over time, surpassing its present value, provided the interest rate is positive.