Re:Ask HN: What Happened to the Reddit IPO?
by mediaman on Tuesday October 25, 2022 @12:00PM
(#33332397)
If you understand what a discount rate is, you understand why higher interest rates decrease value. It's just math: the present value of x cash n years in the future at i discount rate is:
x / ((1+i)^n)
Discount rates are affected by interest rates, because interest rates represent what else you could do with your capital (you can always invest in a Treasury instead of a tech stock).
x / ((1+i)^n)
Discount rates are affected by interest rates, because interest rates represent what else you could do with your capital (you can always invest in a Treasury instead of a tech stock).
So if i goes up, x goes down.