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The word "discount" means that a cash flow today is more valuable than identical cash flow in future because a present cash can be invested immediately and begin earning returns at rate
, while a future flow cannot.LaTeX Math Inline body r
The value of discount rate is set by the corporate investment policy but usually related to the market-determined Weighted Average Cost of Capital
See also
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Economics / http://nafta.wiki/x/EwPrAgCash Discount
[ Weighted Average Cost of Capital (WACC) ]
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