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Business and economics portal v • d • e This article is within the scope of WikiProject Business, a collaborative effort to improve the coverage of Business on Wikipedia. If you would like to participate, please visit the project page, where you can join the discussion and see a list of open tasks.  B  This article has been rated as B-Class on the project's quality scale.  High  This article has been rated as High-priority on the project's priority scale. Comments: edit · history · watch · purge Please do not combine Discounting, Discount & Discounted Cash Flow. Completely separate discussions even though they are related. Discount is not necessarily from a "Discounted Cash Flow". A reference between these 3 items might be useful. But combining them in 1 single discussion would tend to be cumbersome, & might lose some of the detail needed to fully explain each if one tries to make it less cumbersome.

WHAT IS EXACTLY THE ANTONYM OF DISCOUNT?

Discounting is basically reverting the cash flow with a certain rate of interest so that it gives present value of the future cash flow.

-Mayank Gangwal

[edit] Cash flows and utility

As written this article privileges cash flows over utility flows. However, cash flows are only an example of utility flows: in general, for firms, we assume that utility = profit. Any comments, or should I go ahead and change the article? Tobacman 02:20, 8 December 2006 (UTC)

[edit] bad debts ladger

Under which ladger bad debts entry can be enterred

[edit] A "Discount" is a "Charge" paid by someone who wants to delay payment

A "Discount" is a "Charge" that is paid to obtain the right to delay a payment. Essentially, the payer purchases the right to make a given payment in the future instead of in the Present. The "Discount", or "Charge" that must be paid to delay the payment, is simply the difference between what the payment amount would be if it were paid in the present and what the payment amount would be paid if it were paid in the future.

A "Discount Rate" ^[1] is the rate at which the "Discount" must increase in order to obtain the right to increase the amount of time the payment is delayed. Usually, it is thought that every additional delay is increasingly onerous. As a result, to obtain the right to extend the delay in payment, the increase in the "Discount" must be greater than the increase in the Delay. Therefore, the "Discount Rate" is used to show rate at which the rise in the "Discount" is compounded as the time period associated with the delay in the payment is extended.

Since economic models assume a person can earn a return on money by investing it, the "Discount Rate" is usually considered to be the same as the rate of return the person could receive on invested money. Since an investor earns a return not only on the original principle investment, but also on the earnings made thus far from the original investment, earnings are compounded as time moves forward into the future. Hence, this is usually the justification for having the "Discount" compounded as the time before payment can be received is extended. Simply put:

Investing $P in the Present will yield a profit of $P*(1+r)^t - $P after t time periods (r is the Rate of Return on the investment). As a result, a person must pay a "Discount" of $P*(1+r)^t - $P to obtain the right to delay making a payment to this investor for t periods. Hence, borrowing $P for t periods means the borrower will need to pay the lender $P*(1+r)^t after t time periods to obtain the loan.

Hence, We can also say that $p is the Discounted future payment of $F if $p=$F/(1+r)^t

Could you comment on this? I believe that this is a better explanation of what a Discount is. Thanks.

Please Note that "Discounting" may be different from the "Discount". "Discounting" is a calculation process, where as the "Discount" is the result obtained from the "Discounting" process. Mgmwki (talk) 21:46, 5 November 2008 (UTC)mgmWiki 15:45, 5 Novembr 2008 (UTC) —Preceding unsigned comment added by Mgmwki (talk • contribs)

A "Discount" is a "Charge" that is paid to obtain the right to delay a payment. Essentially, the payer purchases the right to make a given payment in the future instead of in the Present. The "Discount", or "Charge" that must be paid to delay the payment, is simply the difference between what the payment amount would be if it were paid in the present and what the payment amount would be paid if it were paid in the future.

A "Discount Rate" ^[1] is the rate at which the "Discount" must increase in order to obtain the right to increase the amount of time the payment is delayed. Usually, it is thought that every additional delay is increasingly onerous. As a result, to obtain the right to extend the delay in payment, the "Discount" must rise faster the length of the Delay. Usually, the "Discount" for any delay is shown by compounding the its growth over time by the "Discount Rate"

Since economic models assume a person can earn a return on money by investing it, the "Discount Rate" is usually considered to be the same as the rate of return the person could receive on invested money. Since an investor earns a return not only on the original principle investment, but also on the earnings made from the original investment, earnings are compounded as time moves forward into the future. Hence, this is usually the justification for having the "Discount" compounded as the time before payment can be received is extended.

Grammer Considerations. Mgmontini (talk) 03:43, 14 November 2008 (UTC)

I will update the page since I see no comments. —Preceding unsigned comment added by Mgmwki (talk • contribs) 21:13, 5 December 2008 (UTC)