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the rate of discount.

V

verma.kunal13

Member
Hello friends.

Could someone please help me out with one doubt. In chapter 5, question 5.13, page 18, while solving the discount payment... Why solution has taken the power as -24, why not only 24? Please help.

Warm regards,
Kunal Verma
 
Hello friends.

Could someone please help me out with one doubt. In chapter 5, question 5.13, page 18, while solving the discount payment... Why solution has taken the power as -24, why not only 24? Please help.

Warm regards,
Kunal Verma

Because we are given a rate of discount which we want to accumulate with.

In the same way if you have 10% interest you multiply by 1.1^-5 if you want to discount for 5 years.
 
Still vague to me.

Thank you Mr. Lee!

My doubt is still unanswered. I was thinking for accumulating the formula should be used as C(1-d)^n. Why -n when we are already using the discount rate (d). Otherwise we accumulate the value using rate of interest C(1+i)^n. Pleaase explain where I am thinking wrong?

Good day!
 
Thank you Mr. Lee!

My doubt is still unanswered. I was thinking for accumulating the formula should be used as C(1-d)^n. Why -n when we are already using the discount rate (d). Otherwise we accumulate the value using rate of interest C(1+i)^n. Pleaase explain where I am thinking wrong?

Good day!

(1-d)^n = V^n which is discounting. We are asked to accumulate not discount. Hence the negative power.
 
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