Discount rate, Microeconomics

Discount Rate

The term discount rate relates to business valuations. It is the rate applied to a future torrent of making an income or cash flow to measure its represent entity. Discount rate and capitalization rate are used interchangeably to designate the premium charged by investors as compensation for the perceived possibility, or uncertainty, in receiving forecasted future advantages. It can be thought of as the minimum rate of return needed for an investment project to be considered acceptable.

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