What is "present value of interest earned"?

Question

I know the concept of present value in interest theory. However, I don't somehow understand the concept of present value of interest earned. Interest is earned over a period of time. I read about this concept in a textbook, but couldn't understand it.

If we invest $100 today and the annual effective compound interest rate is 10%, then we have $110 in one year. Here, we have earned $10 of interest. However, the textbook takes the present value of those $10, which is about $9. I don't understand the meaning of this and how to interpret this.

Answer 1

i don't get how you can understand PV of non-interest cash flows, but not for interest.

it's the exact same thing.  $100 today is more valuable than $100 tomorrow, regardless of the source of the money.

Answer 2

Its pretty self explanatory....It's the present value like if  I give you $10 at 10% interest with full payent expected in 10 days then tomorrow the value is $10.01.