What is Discount Rate? | Learn with Finance Strategists | Under 3 Minutes

Discount rate is the rate of return used to discount future cash flows when calculating an investment’s present value.

A discount rate is applied to future cash flows because money earned in the future is less valuable than money earned today.

This is based on the principle that money should make more money over time - a concept known as the “time value of money.”
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0:00 Discount Rate Definition
0:31 When is Discount Rate Used?
1:04 Discount Rate Purpose
1:30 Discount Rate Example
2:14 Discount Rate Question & Application
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