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Home > Discount rate

1. The interest rate that an eligible depository institution (such as a bank) is charged to borrow short term funds directly from the central bank. This is also known as the base rate, as a profit-making bank will need to charge rates higher than this to its customers.

2. The interest rate used in accounting procedures to determine the present value of future cash flows, ie the discounted value of an amount of cash at some future date.

The concept of a discount rate is an old one - the future is uncertain, and having something now is worth more than (maybe) having it later. This is reflected in the saying "A bird in the hand is worth two in the bush."

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Topics: Discount Rate Bank Future Cash Interest Value Worth Hand Short...

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Discounted cash flowIn the field of finance, a discounted cash flow value of an investment (measured in terms of the cash you will put into and receive from it) adjusted for the time value of money. The future cash flows must be discounted in order to express their present v DiscountIn finance, discounting is the process of finding the current value of an amount of cash at some future date, and along with compounding cash form the basis of time value of money calculations. The discounted value of a cash flow is determined by reducing Discounts and allowancesDiscounts and allowances are modifications to the basic price. They could modify either the manufacturers list price (which is a price determined by the manufacturer and often printed on the package), the retail price (which is set by the retailer and oft Discount storeA discount store is a retail store offering a wide range of products, many branded, at discounted prices. They are not Pound or Dollar Stores, which do not normally offer as many branded items. Discount rateDiscount Rate 1. The interest rate that an eligible depository institution (such as a bank) is charged to borrow short term funds directly from the central bank. This is also known as the base rate as a profit-making bank will need to charge rates higher