Discounting terminology confusion An example of the terminology that surrounds discounting that confuses me can be found in &quot;Investment and Hysteresis&quot; by Dixit:

Let future revenues be discounted at a positive rate $\rho &gt; 0 \ldots$ Then, given a current level $R$ of revenues, the expected present value of the discounted future streams of revenues is $R / \rho$.

Hence, the net present value of the investment is quantified as $R/\rho - K$, where $K$ is the sunk cost.
What I would like to understand is what this formulation has to do with exponential discounting; in particular, where is the sum over the time periods (alluded to in the phrase &quot;future revenue streams&quot;, but also made clear in the context of the paper)? Is this some kind of economist shorthand?
This matters because, as far as I can see, he uses the exact expression above for the NPV in the key derivation in the paper, which suggests to me that I've misunderstood his concept of &quot;discounting&quot;.
(This notation is not unique to this paper: I've encountered this in several places; cf. Allcott and Greenstone &quot;Is there an Energy Efficiency Gap&quot;.)
Well this is 'exponential discounting'. An infinite sum of geometric series:
$$\sum R+ R\delta + R\delta^2.... R\delta^t = \frac{R}{1-\delta}, \text{ if } |\delta|&lt;1$$
Now lets call the denominator rho $1-\delta= \rho$.
The exponential discounting is there since its an infinite sum of geometric series.
Edit: In response to Giskard's +1 comment I tried to look deeper into the paper and while I think that the Dixit is actually implying the above and just not being clear on terminology it is also possible that he means simply net present value of infinite constant stream as:
$$\sum \frac{R}{(1+\rho)^t}= \frac{R}{\rho}$$
However, I think the former interpretation is the right one because its more closer to how discount rates are treated in some other papers I have seen and I think he was just sloppy with terminology.