@wikipedia
A positive
number number (usually
designated denoted as
"") showing how future cash value in time ) which drives the value of Cash Discount over accounting period (usually 1 year) is related to the present cash value : as:
| LaTeX Math Block |
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mathblock |
F \mbox{Discounted Cash Value} = P\frac{ \cdot (mbox{True Cash Value} }{1+r)^t} |
The
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.
The value of discount rate is set by the corporate investment policy and usually related to the at higher rate than Weighted Average Cost of Capital with typical market inputs.
See also
...
Economics / Cash Discount
[ Weighted Average Cost of Capital (WACC) ]
