This paper poses a time varying magnetic field problem in cylindrical coordinate with different permeabilities for each region. The problem is solved using the finite element and finite difference methods for the linear case. The results of the finite difference method show low magnetic vector potential as well as the magnetic flux density when compared to the finite element. This paper investigates the cause and the dependency of error production to the number of mesh points (grid size) selected and the permeability of the medium when using the finite difference method in conjunction with boundary condition of the third kind. It then, presents a technique to overcome the problem of low magnetic flux density calculation using the finite difference method. The results obtained by the new technique shows close agreement with the finite element method. In this problem the boundary condition of the third kind is utilized.