A discount multiplier is a financial calculation used to determine the present value of a future cash flow. In other words, it helps businesses and investors understand how much a future payment is worth today, taking into account the time value of money and a given discount rate.
Discount multipliers are essential for making informed financial decisions, from capital budgeting to investment analysis. By incorporating the concept of time value of money, they help businesses assess the true cost of future cash flows and make better-informed decisions about investments and borrowing.