How should I set the discount rate?

The discount rate specifies the rate at which future cash flow should be discounted. It represents the fact that a earned dollar tomorrow is actually worth less to a company than the same dollar earned today.

The discount rate is obviously linked to the rate of inflation, or the cost of capital, depending on the context, but not only!

For instance, in a business environment that is highly uncertain, and where the future is hard to predict, discount rates should be set at higher levels to reflect that uncertainty. As an example, a company specialized in the development of mobile apps should apply a much higher discount factor than a company selling steel in a regulated market, even though they might be exposed to the same rate of inflation.