Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Discount Rate shopping experience:
1. Compare - without doubt the biggest advantage that the Discount Rate offers shoppers today is the ability to compare thousands of Discount Rate at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.
2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about
3. Testimonials - don't know anybody that has bought a Discount Rate? Wrong! If the Discount Rate is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.
4. Questions - Got a question about Discount Rate then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....
5. Reputation - Never heard of the company selling Discount Rate? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Discount Rate and build up a picture of their reputation for sales, returns, customer service, delivery etc.
6. Returns - still worried that even after all of the above your Discount Rate wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.
7. Feedback - happy with your Discount Rate then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.
8. Security - check for the yellow padlock on the Discount Rate site before you buy, and the s after http:/ /i.e. https:// = a secure site
9. Contact - got a question about Discount Rate, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.
10. Payment - ready to pay for your Discount Rate, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.
For the interest rate charged to banks for borrowing short term funds directly from a central bank, see discount window.
The
discount rate is a
finance concept based on the future
cash flow in lieu of the present value of the cash flow. The divisor in the discount rate formula is the resultant future value, including income.
The concept of a discount rate differs from that of an
interest rate, most notably in that the divisor in the interest rate formula is the original investment.
Example
Suppose there is a
government bond that sells for $80 and pays $100 in a year's time. The discount rate represents the discount on the future cash flow:
\frac{100-80}{100} = 20\%
The interest rate on the cash flow is calculated using 80 as its base:
\frac{100-80}{80} = 25\%
For every interest rate, there is a corresponding discount rate, given by the following formula:
d = \frac{i}{1+i}
i = \frac{d}{1-d}
An alternative method of understanding a discount rate is to consider that the discount rate tells how much future value is interest and how much is
Debt. For example, if $100 is deposited into an account that pays 50% interest, the amount that is subsequently withdrawn will be $150. The discount rate is 0.5/(1+0.5) = 1/3 or 33.3%. Based on this, 33.3% of the $150 is interest and the other 66.7% is principal.
The interest rate that is used to calculate the Internal rate of return or
Net present value of investments is NOT the discount rate as defined here. Similarly
Discounted cash flow uses the normal calculation of interest, not the discount rate defined here.
Economic Policy
One of the major issues in economics is what is an appropriate discount rate to use under various circumstances. For example, in assessing the impact of very long-term phenomena such as climate-change, use of any discount rate much more than 1% per annum renders long-term damage (occurring in, say, 200 years time) of negligible importance now, and therefore entails that there is no need to take preventative action. However, discount rates for climate change are uncertain and debatable in today's economic and scientific community.
Conversely, governments often take a short-term view of things, effectively applying discount rates of perhaps 20% p.a. or higher, on the grounds that anything they do or fail to do which has detrimental effects in (say) 10 or more years' time won't prevent their re-election sooner than that.
In practice, discount rates such as 2%, 3%, 5% and 10% are widely used in economics. However there is little consensus on what value is appropriate in any given circumstance, and it often makes a significant difference.
See also
External links
- Definition of the "Discount Rate" from the Federal Reserve Board's official site
- Instruments of the Money Market: Table of Contents
- The Discount Rate and Theories of the Great Depression, R. L. Norman, Jr.
- Instruments of the Money Market: Chapter 3 - The discount window
For the interest rate charged to banks for borrowing short term funds directly from a central bank, see discount window.
The
discount rate is a finance concept based on the future
cash flow in lieu of the present value of the cash flow. The divisor in the discount rate formula is the resultant future value, including income.
The concept of a discount rate differs from that of an
interest rate, most notably in that the divisor in the interest rate formula is the original investment.
Example
Suppose there is a government bond that sells for $80 and pays $100 in a year's time. The discount rate represents the discount on the future cash flow:
\frac{100-80}{100} = 20\%
The interest rate on the cash flow is calculated using 80 as its base:
\frac{100-80}{80} = 25\%
For every interest rate, there is a corresponding discount rate, given by the following formula:
d = \frac{i}{1+i}
i = \frac{d}{1-d}
An alternative method of understanding a discount rate is to consider that the discount rate tells how much future value is interest and how much is Debt. For example, if $100 is deposited into an account that pays 50% interest, the amount that is subsequently withdrawn will be $150. The discount rate is 0.5/(1+0.5) = 1/3 or 33.3%. Based on this, 33.3% of the $150 is interest and the other 66.7% is principal.
The interest rate that is used to calculate the Internal rate of return or
Net present value of investments is NOT the discount rate as defined here. Similarly
Discounted cash flow uses the normal calculation of interest, not the discount rate defined here.
Economic Policy
One of the major issues in economics is what is an appropriate discount rate to use under various circumstances. For example, in assessing the impact of very long-term phenomena such as climate-change, use of any discount rate much more than 1% per annum renders long-term damage (occurring in, say, 200 years time) of negligible importance now, and therefore entails that there is no need to take preventative action. However, discount rates for climate change are uncertain and debatable in today's economic and scientific community.
Conversely, governments often take a short-term view of things, effectively applying discount rates of perhaps 20% p.a. or higher, on the grounds that anything they do or fail to do which has detrimental effects in (say) 10 or more years' time won't prevent their re-election sooner than that.
In practice, discount rates such as 2%, 3%, 5% and 10% are widely used in economics. However there is little consensus on what value is appropriate in any given circumstance, and it often makes a significant difference.
See also
External links
- Definition of the "Discount Rate" from the Federal Reserve Board's official site
- Instruments of the Money Market: Table of Contents
- The Discount Rate and Theories of the Great Depression, R. L. Norman, Jr.
- Instruments of the Money Market: Chapter 3 - The discount window
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