Q.

What is the difference among the three concepts of interest rate, MARR, and
discount rate?
ANS: Interest is the Percentage of principal amount received by lender or paid
off by borrower. And the amount of interest is calculated by the rate of interest
which is equal to the interest amount paid or received over a particular period
divided by the principal sum borrowed or lent. Example of interest rate can be
taken of Money deposited at bank and a fix amount will be received by person
in accordance to interest rate decided. Whereas, Discount Rate is the interest
percentage anticipated by investor to receive after a specific period of
investment. Discount rate is used to calculate the present value of future cash
flows. And Investor use this rate to judge whether an investment is worth
considering or should be discarded. For Example, an investor might have
$50,000 to invest and must receive at least a 8 percent return over the next 6
years in order to meet his goal. This 8 percent rate would be considered his
discount rate. It’s the amount that the investor requires in order to make the
investment. While MARR is the minimum rate of return from an investment.
As an example, suppose a manager knows that investing in a conservative
project, such as a bond investment or another project with no risk, yields a
known rate of return. When analysing a new project, the manager may use the
conservative project's rate of return as the MARR .