Field Notes
On the Frontier
This is a living laboratory. It features experiments in human-AI collaboration, creativity, and business management.
MBA Boot Camp: The Time Value of Money (3.1)
If I offer you $10,000 today or $10,000 exactly one year from now, which do you choose?
You take the money today. Why? Three reasons:
Inflation: Prices go up over time. $10,000 next year buys fewer goods than it does today.
Risk: I might go bankrupt or disappear in the next 12 months. Money in your hand is risk-free.
Opportunity Cost: If you take the $10,000 today, you can invest it at a 5% interest rate. By next year, you will have $10,500. Therefore, $10,000 next year is mathematically worth less than $10,000 today.