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Discount Rate—Explanation, Definition and Examples

Valutico

Weighted Average Cost of Capital (WACC): WACC is the average rate of return a company is expected to provide to all its investors, including equity and debt holders. It is calculated by weighting the cost of equity and cost of debt based on their proportions in the capital structure.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

But here, we use what interest we could get from an alternative investment in the market, called the Market Rate. Discount Factor (using Market Rate: r=10%). This value is widely referred to as the “Net Present Value” (NPV). . We add that return on, and get a larger cash value in future years. .