The discount rate formula for present value in Excel is a financial calculation used to determine the current value of a future sum of money. For example, if you expect to receive $1,000 in one year, the present value of that amount today would be less than $1,000 due to the time value of money.
This formula is crucial for making informed investment decisions, as it allows investors to compare the potential returns of different investments on a like-for-like basis. It has been used for centuries, with the first recorded use dating back to the 13th century.