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DISCOUNTING

PRINCIPLE
Introduction
• What is the essence of Discounting Principle?

• Ans:- Discounting Principle is based on the well


known verb,
“A bird in a hand is better than two in the bush”.

It is a fundamental principle of a rupee that


the value of a rupee tomorrow is lesser than
that of the value of a rupee available today.
• Mathematical formula for the analysis of
discount:-

V = A/(1+i)
where,
V = Present value of Rupee
A = Expected return amount after a
certain time interval(interms of rupee)
i = Current rate of interest
CONCLUSION

• Timing of receipt of an amount should be


duely taken into consideration in the
solution of a particular problem relating
to investment.
ANY QUERY ?
THANK YOU

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