ERM Glossary: Risk discount rate
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The risk discount rate is the rate
at which future uncertain cash flows may be discounted when carrying out a
discounted cash flow (DCF) assessment of the value of a project. It can be viewed
as representing the risk-free rate of return (in a given currency) that
providers of capital demand plus an amount to allow for the risk that the
profits from the project may not emerge as expected.
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