Annual discount rate the rate by which you want to discount the future cash flow. For example, 6% means that $1000 in a year should be valued at $1000/(1 + 6%) = $943 in today's dollars, because if one has $943 today and invests it, one can probably get $1000 in a year. The recommended rate is the long-term (10 yr) government bound return rate, which is about 6% in the United States.
