Hi, What is exactly the logic of discounting future cash flows? I understand when future cash inflows are discounted with "expected return". But in one instance I saw Savings in future is discounted with "interest on loan rate"? What is the logic in that?
We use expected return for the true value of expected income now but the savings are depend upon the market conditions therefore to know the correct market value of savings we use market rate I.e loan rate
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