A Discount Rate is 1) the reduced price that is offered to customers if they buy large quantities of products or services; 2) the rate of interest that a country’s central bank charges for lending money to other banks; 3) the interest rate used to discount a stream of future cash flows to its present value. The Discount Rate often used in capital budgeting that makes the net present value (NPV) of all cash flows from a particular project equal to zero. Generally, the higher the internal rate of return (IRR) is more desirable for the capital budgeting review.
Related Definitions in the Project: The Economic Reviews
