Why a dollar next year is worth less than a dollar today
The discount rate is how you translate future cash into today's money. A higher rate means you demand more compensation for risk and waiting — so the same future cash flows are worth less right now. Get this one number wrong and every downstream figure drifts with it.
See this in the terminal
Jump to a live company and drag the discount rate yourself — watch fair value move in real time.
Knowledge check
If you raise the discount rate, what happens to the estimated fair value?
- It goes down
- It goes up
- It stays the same



