Discount Factor Calculator

A factor used in obtaining the present value by which future cash flow is multiplied is called as the discount factor. The discount factor can be calculated based on the discount rate and number of compounding periods.

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A factor used in obtaining the present value by which future cash flow is multiplied is called as the discount factor. The discount factor can be calculated based on the discount rate and number of compounding periods.

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Formula:

P(T) = 1 / (1 + r)T Where, P(T) = Discount Factor r = Discount Rate T = Number of Compounding Periods

Example

Discount Factor

If the discount rate is 50 % and discretely compounded time is 10 seconds, then discount factor is 1 / (1 + 0.5 )10 = 0.017 %

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