Enter the discount rate in percent and the number of compounding periods into the calculator. The calculator will evaluate and display the equivalent discount factor.
- Double Discount Calculator
- Cash Back Calculator
- Triple Discount Calculator
- Discounted Payback Period Calculator
- Discount Ratio Calculator
Discount Factor Formula
The following equation can be used to calculate a discount factor given the discount rate and compounding periods.
D = 1 / (1 + r)^T
- Where D is the discount factor
- r is the discount rate (%)
- T is the number of compounding periods.
To calculate the discount factor, divide 1 by the result of 1 plus the discount rate raised to the power of the number of compounding periods.
Discount Factor Definition
What is a discount factor? A discount factor is an equivalent ratio or factor for a discount that’s applied over many compounding periods. For example, a 1% discount over 10 periods is a discount factor of .9053. Multiply the .0953 number by your original number to get the final price or value of your item.
Discount Factor Example
How to calculate a discount factor?
- First, determine the rate.
Determine the discount percentage rate.
- Next, determine the number of compounding periods.
Determine the total number of compounding periods of the discount.
- Finally, calculate the discount factor.
Calculate the discount factor using the formula above.
FAQ
A discount factor is an equivalent ratio of a discount that is applied over more than one period.
