How do you explain discount rate?

First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal Reserve Bank through the discount window loan process, and second, the discount rate refers to the interest rate used in discounted cash flow (DCF) analysis toClick to see full…

First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal Reserve Bank through the discount window loan process, and second, the discount rate refers to the interest rate used in discounted cash flow (DCF) analysis toClick to see full answer. Hereof, how do you define discount rate?Definition: Discount rate; also called the hurdle rate, cost of capital, or required rate of return; is the expected rate of return for an investment. In other words, this is the interest percentage that a company or investor anticipates receiving over the life of an investment.Additionally, what does a low discount rate mean? In order to determine the current value of future cash flow, which is essentially the point of applying the discount rate to business endeavors, one must first evaluate the time value of money and the uncertainty risk wherein a lower discount rate would imply lower uncertainty the higher the present value of future In this regard, why is it called the discount rate? The discounted rate of return – also called the discount rate – is the expected rate of return for an investment. Also known as the cost of capital or required rate of return, it estimates current value of an investment or business based on its expected future cash flow.What is discount example?The definition of discount is reduced prices or something being sold at a price lower than that item is normally sold for. An example of something described as discount is a purse sold for 50 percent off its normal price or a store that focuses on selling designer items at below-market prices.

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