# What factors affect discount rate?

**value**[8, 9] and it is hard to expect them to be constant during the whole period

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Moreover, how is the discount rate determined?

The **discount rate** is the **rate** of return used in a **discounted** cash flow analysis to **determine** the present value of future cash flows. In a **discounted** cash flow analysis, the sum of all future cash flows (C) over some holding period (N), is **discounted** back to the present using a **rate** of return (r).

Likewise, what does a low discount rate mean? In order to determine the current value of future cash flow, which is essentially the point of applying the **discount rate** to business endeavors, one must first evaluate the time value of money and the uncertainty risk wherein a **lower discount rate** would imply **lower** uncertainty the higher the present value of future

Simply so, what is the difference between discount rate and discount factor?

Whereas the **discount rate** is used to determine the present value of future cash flow, the **discount factor** is used to determine the net present value, which can be used to determine the expected profits and losses based on future payments — the net future value of an investment.

What is a risk adjusted discount rate?

Definition: **Risk**-**adjusted discount rate** is the **rate** used in the calculation of the present value of a risky investment, such as the real estate or a firm. In fact, the **risk**-**adjusted discount rate** represents the required return on investment.