Question

No inflation no time value of money

Answer 1

Answer:

There are basic reasons to support the TVM theory . First , a dollar can be invested and earn interest over timev, giving it potential earning power . Also , money is subject to inflation , eating away at the spending power of the currency over time , making it worth a lesser amount in the future .

Finally , there is always the risk of not actually receiving the dollar in the future , whereas , if you hold the dollar now , there is no risk of this happening (as the old bird-in-the-hand-is-better-than-two-in-the-bush saying goes).

Getting an accurate estimate of this last risk isn't easy and , therefore , it's harder to use in a precise manner....