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.
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.
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.
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