Discount Factor Calculator

✖Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.ⓘ Discount Rate [DR]			+10% -10%
✖Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.ⓘ Number of Periods [n]			+10% -10%

✖Discount Factor refers to a variable used in discounted cash flow (DCF) analysis to adjust future cash flows to their present value.ⓘ Discount Factor [DF]

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Formula

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Discount Factor

Formula

`"DF" = 1/(1*(1+"DR")^"n")`

Example

`"0.797194"=1/(1*(1+"0.12")^"2")`

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Discount Factor Solution

STEP 0: Pre-Calculation Summary

Formula Used

Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods)
DF = 1/(1*(1+DR)^n)
This formula uses 3 Variables

Variables Used

Discount Factor - Discount Factor refers to a variable used in discounted cash flow (DCF) analysis to adjust future cash flows to their present value.
Discount Rate - Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.
Number of Periods - Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.

STEP 1: Convert Input(s) to Base Unit

Discount Rate: 0.12 --> No Conversion Required
Number of Periods: 2 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

DF = 1/(1*(1+DR)^n) --> 1/(1*(1+0.12)^2)

Evaluating ... ...

DF = 0.79719387755102

STEP 3: Convert Result to Output's Unit

0.79719387755102 --> No Conversion Required

FINAL ANSWER

0.79719387755102 ≈ 0.797194 <-- Discount Factor

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Kashish Arora

Satyawati College (DU), New Delhi

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< 23 Financial Accounting Calculators

DuPont Analysis

Go Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity)

Internal Rate of Return

Go Net Present Value = sum(x,0,Number of Periods,((Cashflow at End Period/(1+Internal Rate of Return)^x)))-Initial Investment

Net Operating Cycle

Go Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables)

Discount Lost

Go Discount Lost = (Discount Percentage/(100-Discount Percentage))*(365/(Final Payment Date-Last Discount Date))

Annual Equivalent Cost

Go Annual Equivalent Cost = (Asset Price*Discount Rate)/(1-(1+Discount Rate)^-Number of Periods)

Net Present Value

Go Net Present Value = sum(x,1,Time Period,(Cash Flow/(1+Internal Rate of Return)^x))

Annual Percentage Yield

Go Annual Percentage Yield = (1+(Stated annual interest rate/Compounding Periods))^Compounding Periods-1

Effective Yield

Go Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1

Depletion Charge per Unit

Go Depletion Charge per Unit = (Original Cost-Residual Value)/Total Number of Units Depletion

Value of Stock

Go Value of Stock = Expected Dividend Per Share/(Cost of Capital Equity-Dividend Growth Rate)

Shareholders' Equity given Share Capital, Retained Earnings and Treasury Shares

Go Total Shareholders' Equity = Share Capital+Retained Earnings-Treasury Shares

Operating Cash Flow

Go Operating Cash Flow = Earnings Before Interest and Taxes+Depreciation-Taxes

EBITDA

Go EBITDA = Earnings Before Interest and Taxes+Depreciation+Amortization

Discount Percentage

Go Discount Percentage = ((List Price-Price Paid)/Price Paid)*100

Residual Value

Go Residual Value = (Cost of fixed asset-Scrap Rate)/Lifespan

Long term Debt to Equity ratio

Go Long Term Debt to Equity Ratio = Long Term Debt/Shareholders Fund

EBIT

Go Earnings Before Interest and Taxes = Revenue-Operating Expense

Depletion Expense

Go Depletion Expense = Depletion Charge per Unit*Units Consumed

Shareholders' Equity given Total Assets and Liabilities

Go Total Shareholders' Equity = Total Assets-Total Liabilities

Discount Factor

Go Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods)

Discount given Discount Rate and List Price

Go Discount = Discount Rate*List Price

Discount given List Price and Price Paid

Go Discount = List Price-Price Paid

List Price

Go List Price = Price Paid+Discount

Discount Factor Formula

Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods)
DF = 1/(1*(1+DR)^n)

What is Discount Factor?

A discount factor is a financial concept used in discounted cash flow analysis to determine the present value of future cash flows. It represents the factor by which future cash flows are discounted to their present value, considering the time value of money. The discount factor is derived from the discount rate and the time period over which the cash flow occurs. Essentially, the discount factor quantifies the decrease in the value of future cash flows as they are brought back to their present value, reflecting the opportunity cost of capital and the preference for receiving money sooner rather than later. As such, it plays a crucial role in evaluating investment decisions, project profitability, and the allocation of financial resources.
In financial analysis, the discount factor typically refers to a variable used in discounted cash flow (DCF) analysis to adjust future cash flows to their present value.

How to Calculate Discount Factor?

Discount Factor calculator uses Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods) to calculate the Discount Factor, The Discount Factor formula is defined as a factor which represents the present value of future cash flows, reflecting the time value of money and the risk associated with receiving cash flows in the future rather than today. Discount Factor is denoted by DF symbol.

How to calculate Discount Factor using this online calculator? To use this online calculator for Discount Factor, enter Discount Rate (DR) & Number of Periods (n) and hit the calculate button. Here is how the Discount Factor calculation can be explained with given input values -> 0.797194 = 1/(1*(1+0.12)^2).

FAQ

What is Discount Factor?

The Discount Factor formula is defined as a factor which represents the present value of future cash flows, reflecting the time value of money and the risk associated with receiving cash flows in the future rather than today and is represented as DF = 1/(1*(1+DR)^n) or Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods). Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window & Number of Periods is the periods on an annuity using the present value, periodic payment, and periodic rate.

How to calculate Discount Factor?

The Discount Factor formula is defined as a factor which represents the present value of future cash flows, reflecting the time value of money and the risk associated with receiving cash flows in the future rather than today is calculated using Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods). To calculate Discount Factor, you need Discount Rate (DR) & Number of Periods (n). With our tool, you need to enter the respective value for Discount Rate & Number of Periods and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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