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Discount Rate—Explanation, Definition and Examples

Valutico

FEBRUARY 27, 2024

The discount rate effectively encapsulates the risk associated with an investment; riskier investments attract a higher discount rate. Different types of discount rates such as risk-free rate, cost of equity, or cost of debt, are used contextually in financial analysis.

Discounted Cash Flow 52
Discounted Cash Flow Risk Premium Risk-free Rate Weighted Average Cost of Capital 52
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M&A Terms Every Business Owner Should Know

Class VI Partner

JULY 28, 2021

Discount Rate Discount Rate refers to the rate at which a stream of future cash flows is discounted to determine Net Present Value. The higher the degree of risk or unpredictability of a set of future cash flows, the higher the discount rate.

Book Value 52
Book Value Equity Enterprise Value Fair Market Value 52
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