Enter the discount rate and tax rate into the calculator to determine the Net Price Factor. This calculator can also evaluate any of the variables given the others are known.
Net Price Factor Formula
The following formula is used to calculate the Net Price Factor.
NPF = (1 - (D / 100)) * (1 + (T / 100))
Variables:
- NPF is the Net Price Factor
- D is the discount rate (%)
- T is the tax rate (%)
To calculate the Net Price Factor, subtract the discount rate from 100 and divide the result by 100. Then, add the tax rate to 100 and divide the result by 100. Multiply the two results together to get the Net Price Factor.
What is a Net Price Factor?
A Net Price Factor is a numerical value used in the financial industry to calculate the net price of bonds or other securities. It is typically expressed as a percentage of the face value of the security. The net price factor takes into account any accrued interest and discounts or premiums on the security, providing a more accurate reflection of the security’s actual cost or value.
How to Calculate Net Price Factor?
The following steps outline how to calculate the Net Price Factor.
- First, determine the discount rate (D) as a percentage (%).
- Next, determine the tax rate (T) as a percentage (%).
- Next, use the formula NPF = (1 – (D / 100)) * (1 + (T / 100)).
- Finally, calculate the Net Price Factor (NPF).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
discount rate (D) = 20%
tax rate (T) = 8%
