BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Discounting is the process of converting a value received in a future time period to an equivalent value received immediately. For example, a dollar received 50 years from now may be valued less than a dollar received today-discounting measures this relative value.

Detailed explanation-2: -Discounting is the process of determining the present value of a future payment or stream of payments. A dollar is always worth more today than it would be worth tomorrow, according to the concept of the time value of money.

Detailed explanation-3: -discounting: The process of finding the present value using the discount rate. present value: a future amount of money that has been discounted to reflect its current value, as if it existed today. capitalization: The process of finding the future value of a sum by evaluating the present value.

Detailed explanation-4: -Present Value = It is the value of a sum of money today. Future Value = It is the value of a sum of money in the future. Compounding = Finding the future value from present value. Discounting = Finding the present value from future value.

Detailed explanation-5: -We have a tendency to discount the future in favour of today. Also known as ‘present bias’ people tend to focus on today rather than think about what tomorrow might bring, often spending now rather than saving for the future; our future self feels distant.