Discount

You might also like

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 1

What is difference between MARR and Discount rate

MARR:-
A minimum acceptable rate of return (MARR) is the minimum profit an investor expects to
make from an investment, considering the risks of the investment and the opportunity cost of
undertaking it instead of other investments. Minimum acceptable rates of return are also known
as hurdle rates, cut-off rates or benchmarks. An investment has been a successful one if the
actual rate of return is above the minimum acceptable rate of return. If it is below, it's seen as an
unsuccessful investment and you might, as an investor, pull out of the investment.
Discount Rate:-
Discount rate is used to determine the present value of future cash flow. The discount rate
represents the compensation that investors require to assume the risks of investing in that assets
in hopes of receiving the future cash flows generated from it.
Discount rate is the expected rate of return for an investment. It can also be considered the
interest rate used to calculate the present value of future cash flows.

Example:-

You might also like