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Discount Rate
A decimal value that allows money in future years to be converted into equivalent amounts in earlier years. One way of thinking about a discount rate is that for money you will receive in the future it specifies the "discount" you would accept to receive a lesser amount earlier.
Cost of Capital
Another term for the discount rate. "Cost of capital" refers to the sources that a corporation uses to raise money for investments. A company's cost of capital is usually an average of the interest rate of borrowing money (debt) and the expected returns on company stock (equity).
Net Present Value
The value in the present of a sum of money, in contrast to some future value it will have when it has been invested at compound interest.
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