An interest rate that a central bank charges depository institutions that borrow reserves from it
(Cost of Capital) The discount rate, also called the cost of capital, is the interest rate at which a company can borrow money This rate is typically equal to, or some calculated rate above prime rate, or other standard financial metric The value can typically be determined by finance The discount rate is used within the ROI, NPV and IRR calculations as a means for getting future cash flows into present dollar value terms
The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds Collateral is necessary to borrow, and such borrowing is quite limited because the Fed views it as a privilege to be used to meet short-term liquidity needs, and not a device to increase earnings
(Hackett, 1998, chapters 5, 6, and 12) The rate at which the present value of a benefit to be received in the future shrinks as the time lag increases Discount rates are embodied in interest rates charged on borrowed money and other financial investments in financial markets (A common manifestation of how people value money today compared to money in the future is the failure of many people to set aside a small amount of money in the present, even though they know it will grow into a large amount of money for future uses such as retirement In effect, they discount those future benefits at a higher rate than the interest that they expect on their savings )
Interest rate at which an eligible depository institution may borrow funds, typically for a short period, directly from a Federal Reserve Bank The law requires that the board of directors of each Reserve Bank establish the discount rate every fourteen days subject to the approval of the Board of Governors
The interest rate the Federal Reserve charges its member banks for loans This rate influences the rates these financial institutions then charge to their customers The Fed uses this rate as one method of influencing monetary policy The rate is also very important to the bond and stock markets as it provides a clue to interest rate trends and future Federal Reserve policy See federal-funds rate BACK TO TOP
Interest rate the Federal Reserve charges its member banks for short-term loans; often used as a benchmark for other institutions charging interest on loans, credit cards and other debts
The interest rate charged by the Federal Reserve Board to member banks for loans
The interest rate the Federal Reserve Bank charges to member banks for loans Also, the interest rate used to calculate the present value of cash flows
This is the interest rate charged by the U S Federal Reserve, the nation's central bank, for loans to member banks The Fed, as it is called, alters rates to increase or decrease the growth of the nation's economic output
The rate of interest banks must pay when they borrow funds from the Federal Reserve to meet their reserve requirement
The rate of interest charged to banks who buy money from the Federal Reserve System An increase in the rate not only discourages the banks from borrowing, but it also serves as a signal that interest rates are probably going to increase Also, a compound interest rate used to convert expected future income into a present value income
(or discount factor) This accounts for the time value of money and arises naturally in financial models, such as a portfolio selection problem A discount rate of 7% means $1 earned a year from now has a present value of approximately $93 46 (1/1 07) If $1 is earned n years from now, and the discount rate is r, the present value is $1/(1+r)^n In continuous-time models, there are variations, such as defining the present value of K dollars at time t to be K(1-e-rt) In infinite horizon dynamic programming, the discount factor serves to make value iteration a contraction map In that case, the fixed point of the stationary equation
The interest rate used in evaluating water (and other) projects to calculate the present value of future benefits and future costs or to convert benefits and costs to a common time basis
the interest rate which the Federal Reserve system charges member banks when they borrow directly from the Fed The Fed's Board of Governors sets the discount rate, in consultation with the boards of its 12 regional banks Changes in the discount rate are one of the tools available to the central bank for carrying out monetary policy