Calculate "Net Present Value" thru DCF

figure credit: http://www.agmrc.org/


To calculate NPV, usually one will discount cash flow with a fixed discount rate. However, is it reasonable to use a fixed discount rate? Do we have any other rationale choice?

Here comes the "Hyperbolic Discounting" which suggests using a time-inconsistent discount rate.

For more information, please refer to

1. http://en.wikipedia.org/wiki/Hyperbolic_discounting
2. https://ideas.repec.org/p/cwl/cwldpp/1719.html
3. http://physicsoffinance.blogspot.tw/2011/05/deep-discounting-errors.html