Risk-Adjusted Discount Rate Calculator

A rate used to discount returns of high-risk investments is termed a risk-adjusted discount rate. This rate is used to calculate the net present value of the risky investment. The risk-adjusted discount rate calculator is an online aid in such calculation. It signifies that even though the chances of losses are higher in an investment being a high-risk investment, it tends to earn a higher return. The risk-adjusted discount rate is more appropriate for risk-averse investors who are willing to invest in a project with high risk.

The formula for calculating Risk-Adjusted Discount Rate is:

Risk-Adjusted Discount Rate = Risk-free Rate of Interest + Risk Premium

Risk-Adjusted Discount Rate Calculator

How to Calculate Using Calculator?

The user simply has to insert the following data into the calculator for a quick result:

Risk-free Rate of Interest – It is the rate of interest received on investments with zero risks. Some example of risk-free investments includes treasury bills, fixed deposits, etc.

Risk Premium – The formula to calculate Risk premium (under CAPM) is:

Risk Premium = (Market Rate of Return – Risk-free Rate)*Beta

Beta is a unit to measure the risk. To know more about beta, you can refer to the following articles:

Excel Calculator – Risk-Adjusted Discount Rate

You can also download our excel based calculator for risk adjusted discount rate.

Excel Calculator For Risk-Adjusted Discount Rate (57 downloads )


Sanjay Borad

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

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