What Is a Discount Rate?
The discount rate is used to turn future amounts into today's money, by dividing once for every year.
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1.What does a discount rate do in the video's main meaning?
The discount rate is used to turn future amounts into today's money, by dividing once for every year.
2.Which three things do economists see inside a discount rate?
The video names patience, alternatives (what money could earn elsewhere) and risk (a promise might not be kept).
3.In the worked example, what is 1,000 due in three years worth at 3 percent?
1,000 divided by 1.03 three times is about 915; at 8 percent it is about 794 (worked example).
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Education only. Not financial advice.