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Discount Factor Calculator

Calculate discount factors for present value calculations.

Discount Factor Calculator - Calculate Present Value Discount Factors

Discount Factor Calculator

Calculate discount factors for present value calculations and investment analysis.

Calculate Discount Factor

Discount Factor Results

Discount Factor

Present Value of $1

Final Period Factor

Cumulative PV of $1/period

Average Factor

Period Discount Factor Present Value of $1 Cumulative PV

Discount Factor Formulas

Single Period Discount Factor

DF = 1 / (1 + r/n)^(n*t)
Where: DF = Discount Factor, r = annual rate, n = compounding frequency, t = time periods

Continuous Compounding

DF = e^(-r*t)
Where: e = Euler's number (≈2.718), r = annual rate, t = time periods

Present Value Calculation

PV = FV × DF
Where: PV = Present Value, FV = Future Value, DF = Discount Factor

Key Concepts

What is a Discount Factor?

A discount factor is the factor by which a future cash flow must be multiplied to obtain its present value. It represents the value today of $1 received in the future.

Applications

  • • DCF (Discounted Cash Flow) analysis
  • • Bond valuation
  • • Investment appraisal
  • • Financial modeling

Compounding Effects

More frequent compounding reduces the discount factor (increases present value) because interest compounds more often, leading to higher effective rates.

Interpretation

A discount factor of 0.826 means that $1 received in the future is worth $0.826 today, given the discount rate and time period.

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