The difference between discounting and compounding are discussed below:

**Discounting:**

Discounting is the process finding the present value 01 future cash flow or series of cash.**Definition:****u**For calculation of resent value.**se:****Amount of money:**By this method amount of money is decreased.**Value of****money:**In lower rate present value is increased and in higher rate present value is decreased.**Time Line:**Time lie goes to left side from right-hand side.**Calculation:**Future values are divided b interest factor.**Result:**Present or a discounted value.

**Compounding:**

**Definition:**Compounding is the process of finding the future value of a cash flow or a series of cash flows.**Use:**For calculation of future value.**Amount of money:**Amount of money is increased.**Value of**In lower rate future value is decreased and higher rate future value is increased.**money:****Time Line:**Timeline goes to right side from left-hand side.**Calculation:**Present value is multiplied by interest factor.**Result:**Future or compounded value.