The discount rate in net present value (NPV) is the interest rate used to determine the present value of future cash flows. In other words, it is the rate at which future cash flows are discounted to reflect their present value. For example, if a company expects to receive $100 in one year and the discount rate is 10%, then the present value of that $100 is $90.91.
The discount rate is an important concept in finance, as it is used to evaluate the viability of investment projects. A project with a positive NPV is considered to be a good investment, while a project with a negative NPV is considered to be a bad investment. The discount rate is also used to calculate the internal rate of return (IRR) of a project.