For example, there is a 'cash flow' of 80 000. Discount rate is 13%. Then to find discounted cash flow I need to do the following: 80 000 / 1.13 = 70 796.46
If, for example, the same 80 000 is a gross amount and I need to find net one with the same rate of 13%, then 80 000 * 0.87 = 69 600
Why are these numbers different? What is the meaning behind the first and second equation? I realize that it is very simple but somehow I have blanked out on this one.