The discount rate is the interest rate used to calculate net present value (NPV). It represents the time value of money. NPV can help companies determine whether a proposed project may be profitable.

The discount rate is the interest rate used to calculate net present value (NPV). It represents the time value of money. NPV can help companies determine whether a proposed project may be profitable.

In most cases, investors use an IRR calculator or an Excel spreadsheet, which has a built-in function to determine a project's IRR. When calculating IRR, you're solving for an NPV of zero.