discount rates

A discount rate is the interest rate used to determine the present value of future money or cash flows. It reflects the time value of money, accounting for factors like inflation, risk, and opportunity cost. Essentially, a dollar received today is worth more than a dollar received in the future because you can invest today’s dollar to earn interest. The discount rate helps investors and companies decide whether future benefits justify current investments, by translating future amounts into their worth today. It varies depending on the context, risk level, and market conditions.