Discounting [9]

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Bullet points include: Wide variety of uses: Patel and Daykin (2011) provides historical context. Principal drivers of approach selected: purpose and context Two main categories: Matching calculations Budgeting calculations Both relate assets to liabilities and hence to “time value of money” The greater the mismatch between assets and liabilities the more important is the selection of discount rate(s) Some (liability) discount rates do not depend on any specific assets, e.g. social time preference rate, but they are the exception rather than the rule

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