Financial Analysis

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Financial Analysis

A. Difference between Compounding and Discounting

The difference between compounding and discounting is that the compounding finds the future value of the current value with the help of compounding interest rate on the other hand discounting finds the present value of the future value using the discount rate. Compounding and discounting both are inversely proportional to each other.

B.Relationship between Present Value factor and the Present Value of the Annuity Factor.

The formula for the annuity present value factor is represented as 1-(1+r)^-n/r where r is the rate per hour and the n is the number of the ...