Discount rate
The rate used to convert future dollar costs or benefits into present-value terms. A lower discount rate makes long-term future benefits look larger relative to near-term costs; a higher discount rate makes them look smaller. One of the single most consequential, and most overlooked, methodological choices in any regulatory cost-benefit model.
Defined in 2 GAGE programs, which carry 2 distinct definitions of it. The wording above is taught in The AI Lobbyist: Certified AI Policy Strategist.
How each discipline defines it
The same term does different work depending on who is using it. These are the definitions as each program teaches them, unedited.
The rate used to convert future dollar costs or benefits into present-value terms. A lower discount rate makes long-term future benefits look larger relative to near-term costs; a higher discount rate makes them look smaller. One of the single most consequential, and most overlooked, methodological choices in any regulatory cost-benefit model.
The required annual rate of return used to translate future cash flows into today's value, often the organization's cost of capital (commonly 8 to 12 percent); the input that makes net present value reflect the time value of money. It is finance's call, not the project owner's, when a finance function exists.
Where it is taught
The exact lessons this term appears in. The first module of every program is free with a free account.
- ROI Calculation Tools and Templates · AI in the Workplace and Team Leadership, Certified AI Practitioner: Workplace Foundations
- Quantitative Impact Assessment: Modeling Regulation's Costs and Benefits · AI Economics and Impact Modeling, The AI Lobbyist: Certified AI Policy Strategist
Terms it appears with
Not an alphabetical neighbourhood: these are the terms taught in the same lessons, ranked by how often they appear together.