Reply To: Discounting future income


You are quite right. Each entrepreneur will form his own anticipation of the revenue stream and the appropriate discount rate, including the particular uncertainty surrounding the line of production he is considering. There are a spectrum of interest rates throughout the economy that depend on different uncertainty associated with each line of production. Each of the interest rates within each maturity class incorporates the relevant pure rate of interest, which is uniform for all production processes in each maturity class regardless of uncertainty associated with each of them.