Rescale a discount rate between two time frames.
Usage
rescale_discount_rate(x, from, to)
Arguments
- x
Discount rate to rescale.
- from
Original time period.
- to
Final time period.
Value
Rate rescaled under the assumption of compound
discounting.
Details
Continuous discounting is assumed, i.e. when converting a
long-term discount rate into a short-term rate, we assume
that a partial gain from one short term is
multiplicatively discounted in all following short terms.
At the same time, we assume the short-term rate is
time-invariant.
Examples
## 1% monthly interest rate to annual
rescale_discount_rate(0.01, 1, 12)
#> [1] 0.126825
## 3% annual discount rate to (approximately) weekly
rescale_discount_rate(0.03, 52, 1)
#> [1] 0.0005686001