Answer:

Whenever we make financial investment decisions, we need to consider time value of money (loss in value of money with due course of time). The concept of time travel states that we invest money today, so as we can get return in form of future cash flows, but the future cash flows that we are expected to receive are less in value than today. Since we are required to compare cash flows at different point in time. The three different rules of time travel, we compare cash flows by moving it forward in time (FV) and compare, we move it back in time (PV) to enable comparison, so that we can make wise financial decision.

The three rules are:

1. Money can only be compared at the same point of time, to make proper understanding and draw conclusion. Value of money today is always greater than the value of money tomorrow. If we are making any investment today, it can be compared with the cash flows in todays time, it cannot be compared with cash flows arriving in future or cash flows of the past, because of "time value of money".

2. In order to move cash flows forward in time, it must be compounded with the rate of interest every year. In other words, we can say that the interest could be earned on interest of the previous year.

Cash flow (CF) is multiplied with rate of interest (r) is compounded every year, till the final year.

Future Value (FV) = CF (1+r) (1+r) (1+r)......(1+r)^n

3. Similarly, to move cash flow back in time, we must discount it for the number of years we want to expected to take the cash flow back in time(n). It can be very well represented below with the help of the formula

All the three rules are very important, because, as already stated above, in order to have a sound comparison between the investment and expected cash flows, we need to consider the time value of money into consideration. Money can only be compared with other money of the same time period, The value off money in future is always lesser than the value of money earned today. So in order to have a sound comparison, we need to either convert present cash flows into future and compare.......Or we need to convert the future cash flows into present value (discount the cash flows to bring the value of money at par).

Three Rules of Time Travel

The three rules
Rule. 1	Money with same value can only be compared
Rule 2	Money has to moved forward in time by compounding it with interest rate every year till the final date
3	Money (Cash Flow) Expected in future is to be moved backward in time, to make it comparable.

In the table above, the above formulas can be used to convert the money into future values or present values, so that it can be compared with the present cash flows. And could be combined for better evaluation of the cash flows through different time zones.