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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