A discount rate is an interest rate used to determine the present value of future cash flows or to discount a future value. It can be calculated using the Excel function RATE, which takes into account the number of periods, the future value, the present value, and any type of annuity.
Calculating the discount rate using Excel is crucial for various financial and investment decisions, such as evaluating the viability of projects, determining the fair value of assets, and assessing the risk of investments. Understanding the formula and its applications has been instrumental in modern finance.