Discount Rate

Home » CMA Glossary Term » Corporate Finance » Discount Rate

The discount rate definition refers to the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows. It reflects the time value of money and investment risk, serving as a critical component in valuation and capital budgeting. The discount rate is pivotal in assessing the viability of projects and investments by comparing expected returns against the cost of capital.

CMA Exam Academy 16-Week Accelerator Program