is that the interest on future value would have been lost if the $10 had been invested now. Due to the following considerations, receiving $10 today is worth more than receiving $10 in the future value.
One reason why $10 received today is worth more than $10 in the future value is due to risk and uncertainty. Receiving the payment later has an opportunity cost because the money received today may be invested and earn revenue. The purchasing power of future value is reduced by inflation between now and the time it is received. For example, we know that $10 today will allow me to purchase at least one gallon of gas, but will that same amount of money still be valid in five years as future value?
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