discounting
Definition
Multiplying an amount by a discount rate to compute its present value (the 'discounted value'). It is the opposite of 'compounding' where compound interest rates are used in determining how an investment will grow on a monthly or yearly basis. For example, $1,000 compounded at an annual interest rate of 10 percent will be $1,610.51 in five years. Conversely, the present value of $1,610.51 realized after five years of investment is $1,000 when discounted at an annual rate of 10 percent.
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discounting is in the Accounting & Auditing, Banking, Commerce & Finance, Investing and Planning & Scheduling subjects.
discounting appears in the definitions of the following terms:
present value (PV) factors,
compounding,
net present value (NPV),
accounts receivable financing,
bill discounting,
cost benefit analysis (CBA),
discounting bank,
present value (PV),
nominal rate of return,
export credit guarantee
and
discounting appears in these other terms: discounting of bill, discounting of accounts receivable, invoice discounting
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