Do Discount Codes Overrule a Member Level Cost This Way?

I have a member level setup to recurring a monthly cost. I would like to add a discount code that applies to this particular member level and changes it to a yearly cost at a different price.

Based on the settings I’m given, it looks like this is possible, but I’d like to know if I’m misunderstanding how the discount code works.

Will this code replace the price and recurring schedule of the level it’s applied to, or does it add to it?

Example:

Level 1 = $5/month

Discount 1 = $50/year

Will discount code 1 completely take over the level 1 billing, or does it just add onto it or something like that?

Thanks!

https://www.ads-software.com/plugins/paid-memberships-pro/