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In this article, we’ll cover the basics of what a discount rate is and where it’s used. More importantly, we’ll dig deeper into how discount rates can influence investment choices and how they’re used to figure out a company’s worth. What is a discount rate?
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If you want to read to a step-by-step example of a DCF, skip to the end of the article here. How to Determine the Correct Discount Rate to use? In this article, we have referred to the discount rate to be used to discount the future cash flows as the MarketRate (r) or generally as the discount rate (d). .
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