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| Topic: |
Business
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| Number of pages / Number of words: |
2 / 539 |
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In calculating the discount rate we need the following components:
? Future value of the amount expected to grow
? Present value of the amount
? Interest rate
? Number of periods or number of years the investment is expected to grow (Block, Hirt, 2005).
These elements help determine the discount rate and show the relationship between present value and future value...
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While the discount rate shows the worth of money in the present, the interest rate is what is charged for the use of money.
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