time value of money

chapter 2. time value of money

there is one point that discount rate. i am confused in that pls help me.

what actual discount rate give "discount in amount or it give present value"?


regards
mayuresh

 

Discount rate gives the 'amount of discount'
And the discounting factor gives PV of cash flows.

 

time value money

then tell me that in Q2.7 what we we have to find present value or discounted

value?


regards
mayuresh

 

It is clearly mentioned in the last line of the question that we have to find out the immediate payment made by the discount house, which will be the discounted value of the cash flow of £500000 received by the company with the help of a commercial discount rate(which is same as a simple discount rate) of 16%.

 

"Present value" and "discounted value" mean the same. They are different phrases for the same thing.