I'm very confused by the different definitions of "discount" that I'm learning in my different classes. According to what I learned for Exam FM/2, you would use v(t)=(1-d)^t to find the PV of of some amount given the effective discount rate.
But now, in my finance classes, they basically use the word discount interchangeably with interest, and use v(t)=(1+i)^-t to find the PV whether the stated rate is called "interest" or "discount".
Someone please explain??
But now, in my finance classes, they basically use the word discount interchangeably with interest, and use v(t)=(1+i)^-t to find the PV whether the stated rate is called "interest" or "discount".
Someone please explain??
Discount Rate
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