Answer:
Rate of return on future cashflow
Step-by-step explanation:
The discount rate for financial institutions is the rate of return that they will experience when they re re-paid the loans that they granted to other institutions and how much will that money need to be worth in order to be equiparable witht the present value of that amount of money. The discount rate is used for calculate the net present value of the money that an institution is going to loan, invest or spend, and then with that take the best decision for their firm.