💸 What is a Discount Rate and Why Should You Care?

Imagine this:
You’re offered $1 million today, or $1 million five years from now.
Which one do you take?

Most of us would take the money today — and that’s where the discount rate comes in.

In business valuation, the discount rate reflects the time value of money and risk. It helps us calculate what future cash flows are worth today. The higher the risk, the higher the discount rate — and the lower the present value.

So, why is it important?

✅ It affects how much a business is really worth
✅ It tells investors how risky the business is
✅ It helps you compare different investment opportunities on a fair basis

Whether you’re buying a small café or a factory, getting the discount rate right is crucial. A few percentage points can change your valuation by millions.

📌 At ORNA, we help clients understand and apply the right discount rate — not just based on formulas, but on real-world risks.

Curious about how the discount rate applies to your business?
Let’s talk.

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