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How are Discounting and Compounding Related

You may have such questions as What Is Financial Compounding and How Are Discounting And Compounding Related,or you may also seek several helpful information about How To Calculate Compounding Discounting. Besides,you may be interested in answers related to Relationship between Discounting and Compounding,too. Read more as following:

Discounting and compounding can be related as to discounting can be compounded at a daily rate or monthly rate. It works much like compounding interest only the opposite.

How are discounting and compounding related?

They are both based on compounding annually.... More »

How to calculate compounding & discounting?

1. Convert the interest rate for a compounding period into an effective rate for the whole year by exponentiating to the yearly frequency. For example, if the rate per compounding period is 0.5 percent, and there are twelve compounding periods per ye... More »

What is the relationship between discounting & compounding?

Compound interest often is described as “interest on interest.” Interest paid and accumulated on an original deposit or investment is added to the original amount and included when calculating interest payments. For example, a $100 deposit in an acco... More »

How to find the compounding discount of a promissory note?

1. Calculate the interest payment for the first year. Multiply the principal balance of the note by the interest rate by the interest term. For example, if it is a $10,000 loan at an interest rate of 10 percent for two years, then you would multiply... More »

How compounding & discounting help in the financial investment decision making?

Future value is the value of an investment at a certain time in the future at a given interest rate. To calculate the future value of any present amount, you need to multiply that amount by the future value interest factor. FVIF is calculated as foll... More »

10 comments

  1. Trey Reply:
  2. Mommy To Two Preemies Reply:

    I filed my tax return and was expecting a refund of $418.24. Today I received a cheque for $377.54. On the assessment they had a separate line item called “Refund Transfer” listed as $40.70, which was deducted from the $418 to give me the $377. Anyone know what this is?

  3. Wef Reply:

    CAGR is the abbrevation of Compounded Annual Growth Rate related to the financials of the company.

  4. Jennifer Miles Reply:

    If I has an unfunded pension liability of $650 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 7.4 percent, what is the present value of this liability?

  5. Priti Reply:

    how is the future value related to the present value of a single sum?

  6. Impure Intentions Reply:

    The US government issures a 1-year bond with a face value of $5000 and a zero coupon. If the market interest rate is 20 percent. What will the market price of the bond be? If the bond price falls by 5%, what happens to its yield?

  7. Kourtney Reply:
  8. Patty666 Reply:
  9. Stephanie Hershey-buckley Reply:

    A.Internal rate.
    B.Average rate.
    C.Prime rate.
    D.Discount rate.
    E.Compound rate.

  10. Jennfer Reply:

    Define the concepts of compounding and discounting. Use future values and present values to explain how these concepts are related.

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