Forward rate agreement (Interest rate risk management)

Dear sir, today I was practicing an interest rate risk management question from practice ket of Kaplan. Here I got stuck in one part and I need your help.
The question is a long question however I will just write here the part where I have some confusions.

They have mentioned that they want to invest 7.1m Euro in five months time for a period of 4 months. The relevant FRA rate is 5 v 9 (3.5 – 3.45). The current yield is L+0.6%. L is currently 4%.
They asked that what will happen if LIBOR falls by 0.5% during the next five months.
In solution they have done like this:

The FRA fixed rate is 3.45%. Actual LIBOR is 3.5%. The company will therefore have to
make a payment to the bank.
This will be: £7.1m (3.50% – 3.45%) × (4/12) × (1/(1+(3.5 × (4/12)))) or 1,169.65 Euro

This will be deducted from the actual receipts of £97,033 (estimated above) to give a
net £95,863, a return of 4.05%. (NB: This is the FRA rate of 3.45 plus the 0.6% over
LIBOR from the commercial paper.)

My confusion:
It seems that they have discounted above amount by the discount factor (1/(1+(3.5 × (4/12)))).

Is discounting compulsory in FRA questions? Because this is the first time I have seen such discount factor.
Thanks for your assistance.