Discounting


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Discounting

Calculating the present value of a future amount. Discounting is opposite to compounding.

Discounting

The act of determining the present value of future cash flows. Because money is subject to inflation and has the ability to earn interest, one dollar today is worth more than one dollar tomorrow. Discounting, then, is the act of determining how much less tomorrow's dollar is worth. For example, a bank may loan a sum of money and schedule repayments at $100 per month for 10 years. The bank may then discount the value of payments and determine exactly how much (in today's dollars) it will have received once the loan is paid off.

discounting

The appraisal method of computing the value of an income-producing property by calculating the present value of anticipated cash flows.

References in periodicals archive ?
The evidence we have is significant enough to show that for higher education in general, especially private colleges, tuition discounting isn't working," Jerry Davis, vice president for Research at the Lumina Foundation and author of the report.
That's not to say that some colleges can and do continue to grow and thrive under their tuition discounting policies.
Future efforts by standard setters and other policy makers to expand discounting as a measurement technique should meet the described conditions.
Tuition discounting frequently fails to increase net revenue for colleges.
EVALUATING THE CASH flows of future pension benefits involves determining the cash flows' actuarial present value, which means discounting for interest, for mortality and, when applicable, for vesting.