What is amortisation?

This is the process of calculating the present value of a future amount, also known as calculating the net present value. Here, a future amount is discounted to the present, taking into account a specific interest rate or discount rate. This concept is crucial in the financial world, especially in investment analyses, valuations and in making decisions about future cash flows.

Discounting helps in estimating the actual value of a future income or expense in terms of current monetary value.

Similar terms are net present value and discounting, while the opposite process is called compounding.