Discount Factor Calculator

Enter the discount rate (in percent) and the time (in years). If you’re using a nominal APR, also select the compounding frequency. The calculator will evaluate and display the equivalent discount factor (PVIF).

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Discount Factor Formula

The following equation can be used to calculate a discount factor given a per-period discount rate and the number of compounding periods.

D = 1 / (1 + r)^T

• Where D is the discount factor
• r is the discount rate per period as a decimal (r = Rate% ÷ 100)
• T is the number of compounding periods.

To calculate the discount factor, convert the rate from percent to a decimal (divide by 100), then divide 1 by (1 + r) raised to the power of the number of periods. (If you have a nominal APR compounded m times per year for t years, the equivalent exponent is T = m·t and the per-period rate is r = (APR/100)/m.)

Discount Factor Definition

What is a discount factor? A discount factor (also called the PVIF for a single future payment) is the number you multiply a future value by to convert it into a present value for a given rate and number of periods. For example, a 1% rate per period over 10 periods has a discount factor of 0.9053 (since 1/(1.01)¹⁰ ≈ 0.9053). Multiply 0.9053 by the future/original amount to get the discounted (present) value; the implied reduction is (1 − 0.9053) = 0.0947 (about 9.47%) of the future/original amount.

Discount Factor Example

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