Question: Present and future value calculations are dependent upon the interest rates used in the calculations. What does the interest rate represent, conceptually ? In a

  • Present and future value calculations are dependent upon the interest rates used in the calculations. What does the interest rate represent, conceptually? In a later section of the course we will discuss in great detail how to identify and measure appropriate discount rates, so I am NOT looking for a statistically or numerically-focused discussion here. Something more along the lines of what does it mean, economically, to say that the discount rate is 10% instead of 5%?

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