A discount rate formula in Excel is a mathematical expression that calculates the present value of a future sum of money. It is used to determine the value of an investment or loan today, taking into account the time value of money and the risk associated with the investment.
The discount rate is a crucial factor in financial planning and decision-making. It affects the valuation of assets and liabilities, the cost of capital, and the profitability of investments. Historically, the discount rate has been influenced by factors such as inflation, interest rates, and economic growth.