A New Discounting Model for Teaching Finance

Jamal Munshi

Sonoma State University

March 27, 2014

The mathematics of continuous compounding is not limited to the valuation of continuously compounded financial instruments and flow annuities, but rather it is a versatile and robust model that may be used for valuation of all financial contracts normally encountered. It consists of a simple, consistent, coherent and conceptually appealing set of equations that apply without modification to the complete range of applications. The discrete stepwise model of compounding, by contrast, is a redundant innovation that is more complicated than the generalized model and limited in scope.

Number of Pages in PDF File: 12

Keywords: valuation, continuous compounding, time value of money, discounted cash flow, exponential growth

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Date posted: March 29, 2014  

Suggested Citation

Munshi, Jamal, A New Discounting Model for Teaching Finance (March 27, 2014). Available at SSRN: https://ssrn.com/abstract=2417143 or http://dx.doi.org/10.2139/ssrn.2417143

Contact Information

Jamal Munshi (Contact Author)
Sonoma State University ( email )
1801 East Cotati Avenue
Rohnert Park, CA 94928
United States
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