## What discount rate to use for net present value

Calculator Use. Calculate the net present value (NPV) of a series of future cash flows.More specifically, you can calculate the present value of uneven cash flows (or even cash flows). See Present Value Cash Flows Calculator for related formulas and calculations.. Interest Rate (discount rate per period) This is your expected rate of return on the cash flows for the length of one period. Net Present Value vs. Internal Rate of Return. The use of NPV can be applied to predict whether money will compound in the future. The reason that current or potential investors and management use In the standard net present value calculation, the discount rate includes the effects of inflation. As an alternative, you can calculate net present value by converting the real cash flows to nominal cash flows and use a nominal discount rate. Both methods yield the same final number.

Determination of an appropriate discount rate is a key component in any NPV analysis. The use of a discount rate takes account of the changing (declining) value  11 Mar 2020 Interest rate used to calculate Net Present Value (NPV) The discount rate element of the NPV formula is used to account for the difference  2 Sep 2014 For more background on the net present value (NPV), check out the Intuition Behind IRR and NPV and NPV vs IRR. Selecting a Discount Rate  Most financial analysts never calculate the net present value by hand nor with a calculator, instead, they use Excel. =NPV(discount rate, series of cash flow). Investors use different rates for their discount rate such as using the weighted average cost of capital, variable rates, and reinvestment rate. Key Terms. discount

## If shareholders expect a 12% return, that is the discount rate the company will use to calculate NPV. If the firm pays 4% interest on its debt, then it may use that figure as the discount rate

19 Nov 2014 To learn more about how you can use net present value to translate an return, that is the discount rate the company will use to calculate NPV. Determination of an appropriate discount rate is a key component in any NPV analysis. The use of a discount rate takes account of the changing (declining) value  11 Mar 2020 Interest rate used to calculate Net Present Value (NPV) The discount rate element of the NPV formula is used to account for the difference  2 Sep 2014 For more background on the net present value (NPV), check out the Intuition Behind IRR and NPV and NPV vs IRR. Selecting a Discount Rate  Most financial analysts never calculate the net present value by hand nor with a calculator, instead, they use Excel. =NPV(discount rate, series of cash flow). Investors use different rates for their discount rate such as using the weighted average cost of capital, variable rates, and reinvestment rate. Key Terms. discount