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Discount Shopping New Zealand |
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In finance (studies and addresses the ways in which
individuals, businesses and organizations raise,
allocate and use monetary resources over time,
taking into account the risks entailed in their
projects) and economics, discounting is the process
of finding the present value of an amount of cash at
some future date, and along with compounding cash
forms the basis of time value of money calculations.
The discounted value of a cash flow is determined by
reducing its value by the appropriate discount rate
for each unit of time between the time when the
cashflow is to be valued to the time of the cash
flow. Most often the discount rate is expressed as
an annual rate.
To calculate the net present value of a single cash
flow, it is divided by one plus the interest rate
for each period of time that will pass. This is
expressed mathematically as raising the divisor to
the power of the number of units of time.
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