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.

Use discounting in a sentence

  • There are times where you may need to do some discounting when you need to get rid of a lot of your product quickly.

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  • We had a really good discounting strategy that would give customers an advantage when shopping in our store, as opposed to others.

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  • You may want to try to use discounting to get rid of a product if you find yourself with an excess.

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