Respuesta :
When calculating npv, the present value of the nth cash flow is found by dividing the nth cash flow by 1 plus blank the discount rate raised to the nth power.
What is discount rate?
The discount rate is the rate of return, and is used in business valuations of a company in converting a series of future anticipated cash flows to the present value of the business using the discounted cash flow method.
the discount rate has two different definitions and uses. First, the discount rate is the interest rate used in the discounted cash flow (DCF) analysis to get the present value of cash flows in the company. Second, the discount rate is used as an interest rate charged to the financial institutions for loans that they get from the Federal Reserve Bank via the window discount loan process.
Also,
The discount rate is used in the calculation of the future cash flows of a business using the net present value of the company. It expresses the change in the value of the investment money in the company over time. In short, it is vital to get the NPV value if you are going to use the discounted cash flow method to get the value of the method and the discount rate helps in getting this value.
Hence, The discount rate is raised to the nth power.
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