The paper 'Financial Functions Issues' is a wonderful example of a Finance and Accounting Assignment. The concept of compounding and discounting has been explained by Ariel, (2010) while discussing the value of money. He looks at discounting as the process by which the present value of any payment is determined using the interest rates called discounting rates. While in compounding, he defines the concept as the methodology used to determine the future value of payment using compounding interest rates. Explaining the difference between the concept of ordinary and annuity and annuity due. The concept of ordinary annuity and annuity due is commonly used by neoclassical economics.
For instance, Bierwag, (2007) explains that ordinary annuity is that payment which is made over a long period of time at equal intervals and at the end of each period. On the other hand, Chambers and Carleton, (2001) define annuity due to payment made of time at the interval and at the end of each period. It is also important to add that annuity due is a payment made at the beginning of each period.
Ariel, Z. (2010), Methods of Pricing Convertible Bonds Dissertation. Milton, Qld: John Wiley & Sons Australia.
Bierwag, G.O., (2007), Duration Analysis: Managing Interest Rate Risk, Cambridge, MA: Ballinger.
Chambers, D.R. and W. Carleton, (2001), ”A Generalized Approach to Duration”, Research in Finance, Vol. 7, 2000, 163-181, JAI Press Inc.