discount rate
1
4.7
- noun
- /ˈdɪsˌkaʊnt reɪt/
- Specialized
:
tasa de descuento
- When calculating project costs, companies frequently use a discount rate to account for the time value of money.
Examples
-
So in this example, the discount rate is 15% and the discount factor is 24.75%, or how much something in the future is worth today.
Blog text (29) -
These up-front costs are annualized over a 100,000-mile useful life, using an annual discount rate of 6%.
Academic text (1993) -
At a discount rate of ten percent, the net present value of the deductions is higher (74.2 versus 63.9) because of the acceleration.
Academic text (1993) -
The property rights model is based on the theory of exhaustible resources, whereby the transfer of oil production property rights from foreign oil companies to the host government (which is assumed to have a significantly lower discount rate on future revenues) would cause a one-time jump upward in the real price path as domestic extraction was decelerated after expropriation.
Academic text (1990) -
The loan was offered at a discount rate of 5%, making it more affordable for borrowers.
-
Investors often assess the discount rate to determine the present value of future cash flows.
Synonyms
415
2.3
The extra money you pay when you borrow or receive when you save each year
16
6.4
Money taken from a loan before you receive it
5
3.2
Percent a bank charges for borrowing money each year
A bank takes interest off a loan before you get the money
How High
Surface Forms
Morphology
The compound combines 'discount' (a deduction or interest taken in advance) with 'rate' (a percentage or charge), so its meaning as the percentage or rate associated with a discount is directly derivable from the parts. Although the full technical banking details may be specialized, the basic concept — a rate that expresses a discount — is compositionally transparent and cross-linguistically common, so a B1 learner who knows both words would likely understand it.
Etymology
Discount rate comes from the idea of taking off money at the start: discount means to subtract an amount and rate means the percentage. So a loan with a discount rate has 'interest deducted in advance', meaning the borrower gets less cash up front but still pays the interest cost.