The interest rate used to calculate the present value of future cash flows is called the _____ rate.

A) Free.
B) Annual.
C) Compound.
D) Simple.
E) Discount.

Discount Rate

The rate of interest that is applied to find out the present value of cash flows predicted in the future, within the framework of discounted cash flow analysis.

Present Value

The monetary valuation presently of a future sum of money or ongoing cash flows, considering a predetermined rate of return.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, typically on an annual basis.