The difference in between Compounding and Discounting is the method uses to know the

future value of a present amount is known as Compounding. The process of determining the
present value of the amount to be received in the future is known as Discounting. Second,
Compounding uses compound interest rates while discount rates are used in Discounting.
Next, Compounding of a present amount means what we will get tomorrow if we invest a
certain sum today. Discounting of future sum means, what should we need to invest today to
get the specified amount tomorrow. Other than that, the future value factor table is referred to
calculate the future value in case of compounding. Conversely, in discounting, present value
can be computed with the help of a Present value factor table. In compounding, present value
amount is already specified. On the other hand, the future value is given in the case of
discounting.

Compounding and Discounting