What is Discount Rate?
Discount Rate The interest rate used to determine the present value of future cash flows in valuation models and accounting measurements, including DCF analysis, impairment testing, and pension obligations.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Discount Rate” Used in Practice?
The discount rate applied in a discounted cash flow model directly impacts the present value of projected earnings.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Discount Rate?
The interest rate used to determine the present value of future cash flows in valuation models and accounting measurements, including DCF analysis, impairment testing, and pension obligations.
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