• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Forums
  • Search
  • Register
  • Login
  • Latest Topics
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums

Formula: Discount Factor for Multiple Years

Forums › ACCA Forums › ACCA FM Financial Management Forums › Formula: Discount Factor for Multiple Years

  • This topic has 2 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • May 6, 2015 at 6:09 pm #244396
    Saja
    • Topics: 1
    • Replies: 1
    • ☆

    Hello there,

    This is my first time on here and I was wondering if someone can help me with figuring out how to calculate the discount factor 8% for 1-5 years at once without having to do this:
    Y1 DF= 1/(1+.08) = 0.926
    Y2 DF= 1/(1+.08)^2 = 0.857
    Y3 DF= 1/(1+.08)^3 = 0.794
    Y4 DF= 1/(1+.08)^4 = 0.735
    Y5 DF= 1/(1+.08)^5 = 0.681
    Total of 3.993
    I want the shortcut for the 3.993 by using a formula

    May 6, 2015 at 6:29 pm #244399
    Saja
    • Topics: 1
    • Replies: 1
    • ☆

    Ok never mind, I just saw a previous post, it says this [1-(1/(1+r)^n)]/r means [1-(1/(1.08)^5)]/.08 =3.993

    If anyone is interested!

    May 7, 2015 at 7:26 am #244503
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49137
    • ☆☆☆☆☆

    You get given tables in the exam – both for discounting individual flows, and also for discounting annuities (such as the one you have described). You certainly will not have time in the exam to be calculating the discount factors using the formulae!

    I do suggest you watch the free lectures on discounting techniques (and maybe the F2 discounting lectures as well, because this is revision of F2).

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • DIVIJ on IAS 10 Events after the Reporting Period – ACCA Financial Accounting (FA) lectures
  • John Moffat on Group Accounts The Consolidated Statement of Financial Position (2b) – ACCA (FA) lectures
  • saad6411 on Group Accounts The Consolidated Statement of Financial Position (2b) – ACCA (FA) lectures
  • John Moffat on Interest Rate Risk Management – ACCA Financial Management (FM)
  • John Moffat on Group Accounts The Consolidated Statement of Financial Position (2b) – ACCA (FA) lectures

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy