Differentiate between compound interest and discounting
Differentiate between compound interest and discounting.
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A) Compound interest comes in the picture when interest is earned on interest as well as on the original principal of an investment whereas Discounting is the opposite of compounding. B) Compound interest makes the value of an initial amount to increase at an increasing rate. Discounting makes the current value of a future amount to reduce at an increasing rate.
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From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax
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