discount rate

{
  "id": "MLC-T-ENV-008136",
  "term": "discount rate",
  "field": "Environment",
  "definition": "1. An assumed interest rate or rate of return used to calculate the present value of a future payment; in mathematical terms, the present value of receiving $1 Y years hence is 1/(1-r)Y, where r is the discount rate.\n\n2. The discount (i.e., interest) rate used to compute the capital recovery factor, which is used to compute the annualized capital cost for control measures whose costs can be estimated using cost equations.\n\n3. The interest rate used to discount or calculate future costs and benefits so as to arrive at their present values, e.g., 3% or 5%. This is also known as the opportunity cost of capital investment. Discount rates are usually based on government bonds or market interest rates for cost of capital whose maturity is about same as the time period during which the intervention or program being evaluated. For example, the discount rate used by the US federal government is based on the Treasury Department cost of borrowing funds and will vary, depending on the period of analysis.\n\n4. A rate used in determining a present value equivalent of a future stream of dollars. The lower the discount rate, the higher the present value of a future stream of dollars.\n\n5. A percentage that is used to adjust a forecast of expenditures to account for the time value of money or opportunity costs; it can be based on the utility's cost of capital.\n\n6. The interest rate used to convert future payments into present values.\n\n7. Interest rate used to convert future payments into present values.",
  "subject": "Water",
  "references": [
    "Coastal Sensitivity to Sea-level Rise Glossary and Acronyms",
    "Control Strategy Tool (CoST) Glossary",
    "NLM/NICHSR 2004",
    "USDA 2004",
    "Water Conservation Plan Guidelines Glossary",
    "AgSTAR Handbook Glossary"
  ],
  "url": "https://mlchart.com/terminology/environment/discount-rate/"
}