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1. The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank. Different types of loans are available from Federal Reserve Banks and each corresponding type of credit has its own discount rate.
2. The interest rate used in discounted cash flow analysis to determine the present value of future cash flows. The discount rate takes into account the time value of money (the idea that money available now is worth more than the same amount of money available in the future because it could be earning interest) and the risk or uncertainty of the anticipated future cash flows (which might be less than expected).
Wiki User
∙ 12y ago
Wiki User
∙ 11y ago1. The interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank. Different types of loans are available from Federal Reserve Banks and each corresponding type of credit has its own discount rate.
2. The interest rate used in discounted cash flow analysis to determine the present value of future cash flows. The discount rate takes into account the time value of money (the idea that money available now is worth more than the same amount of money available in the future because it could be earning interest) and the risk or uncertainty of the anticipated future cash flows.
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Which term refers to the rate of interest the Federal Reserve Bank charges member banks?
Discount rate
How do you find a discount rate?
Say you need to know how to find the discount rate if a stereo, listed for $259, and now it is sold for $189.07 discount = $259 - $189.07 d= 69.93 d = 69.93/259 discount rate = 27% Cupcake Lover
What is the difference between federal funds rate and the discount rate?
The Federal Funds rate abbriviated as Fed Funds is the overnight loan rate between banks. The Discount Window is the Federal Reseve Bank of New York's overnight interst rate charged to banks from the Federal Reserve, called the discount window rate.
What is the ultimate impact on the money supply of an increase in the discount rate?
The increase in the discount rate will cause the money supply to reduce in growth
What entities in the Federal Reserve System control the discount rate?
The Board of Governors in the Federal Reserve System control the discount rate.
Can you put the word discount rate in a sentence?
I'm calling to check on your best discount rate. I bought this paint at a discount rate. The discount rate does not apply on Saturdays.
Nominal discount rate?
A nominal discount rate doesn't take into consideration inflation and other factors. Conversely, a real discount rate would already have inflation included in the rate. The nominal rate is the amount of discount that is state, whereas, the real discount is the actual amount that will be received.
What is discount rate?
Discount Rate = Cap Rate - Genaral Inflation. If Cap ex % is known then the above formula becomes' Discount Rate = Cap Rate - Genaral Inflation - Cap Ex %.
Which term refers to the rate of interest the Federal Reserve Bank charges member banks?
Discount rate
How do you find the original price of discounted item?
You need to know the discounted price and either the discount amount or the discount rate. If you know the discount amount: Original Price = Discounted Price + Discount If you know the Discount Rate (percentage discount ): Original Price = 100*Discounted Price / (100 - Discount Rate)
What are Advantages and disadvantages of risk adjusted discount rate?
Advantagesconsiders time value of money.involve risk by making discount rate as a function of proposal risk.helps in finding future wealth generated by risky project.Disadvantagesdetermination of RADR itself or risk adjusted premium.does not adjust future cash flow which are risky and uncertain.
How do you find a discount rate?
Say you need to know how to find the discount rate if a stereo, listed for $259, and now it is sold for $189.07 discount = $259 - $189.07 d= 69.93 d = 69.93/259 discount rate = 27% Cupcake Lover
Why use 12 percent discount rate?
70$ with 12% discount
What is the discount rate for a stereo priced at 399.99 but on sale for 329.99 Round the discount rate to the nearest tenth of a percent?
It is 17.5%.
What is meant by discount rate?
cheaper than standard rate :)
How a forward premium or discount is computed?
forward exchange rate can be computed from spot exchange by adding or subtracting premium ir discount. also forward rate can be at forward premiun of discount when comapred to spot exchange rate.
As the discount rate becomes higher and higher the present value of inflows approaches what?
As, the present value of future cash flows is determined by the discount rate, so increase or decrease in the discount rate will affect the present value. Discount rate is simply cost or the expense to the company,so in simplest terms, discount rate goes up, cost goes up,so this will lower the present value of cash flows. Assumes a discount rate of 5%,to discount $100 in one years time: Present Value=$100 * 1/(1.05) =$95.24 Ok,as you say,if the discount rate becomes higher,let's say 8%: Present Value=$100 * 1/(1.08) =$92.6 so, the higher the discount rate, the lower the present value.
