The process of determining the discount rate used to calculate the present value of a future sum of money is known as “how to calculate discount rate for future value”. For instance, if you anticipate receiving $100 in one year, the discount rate will assist you in determining how much the $100 is worth today.
Calculating the discount rate is crucial because it enables accurate decision-making in various financial situations, including investment analysis, project evaluation, and budgeting. Historically, the concept of discounting future cash flows was formally developed in the 17th century by mathematician and philosopher Blaise Pascal.