Discount Rate

Business / Taxes / Discount Rate: The discount rate is the interest rate the Federal Reserve charges on loans it makes to banks and other financial institutions. The discount rate becomes the base interest rate for most consumer borrowing as well. That's because a bank generally uses the discount rate as a benchmark for the interest it charges on the loans it makes. For example, when the discount rate increases, the interest rate that lenders charge on home mortgages and other loans increases. And when the discount rate is lowered, the cost of consumer borrowing eventually decreases as well. The term discount rate also applies to discounted instruments like US Treasury bills. In this case, the rate is used to identify the interest you will earn if you purchase at issue, hold the bill to maturity, and receive face value at maturity. The interest is the difference between what you pay to purchase the bills and the amount you are repaid.

Other Words for Discount

Discount Verb Synonyms: diminish, lessen, minimize, detract from
Discount Adjective Synonyms: reduce, mark down, deduct, lower, take or knock off
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Other Words for Rate

Rate Noun Synonyms: rank, grade, class, classify, evaluate, estimate, calculate, compute, count, reckon, judge, gauge, assess, appraise, measure
Rate Verb Synonyms: measure, pace, gait, speed, velocity, clip
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All Equity Rate

Business / Finance / All Equity Rate: The discount rate that reflects only the business risks of a project, distinct from the effects of financing. MORE

Internal Rate Of Return (IRR)

Business / Finance / Internal Rate Of Return (IRR): Dollar-weighted rate of return. Discount rate at which net present value (NPV) investment is zero. The rate at which a bond's future cash flows, discounted back to today, equal its price. MORE

Discounted Cash Flow

Business / Real Estate / Discounted Cash Flow: Used in measuring the return from a real estate investment, the present value of a future income stream as determined by a given discount rate. MORE

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