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How to calculate discount factors???????????

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › How to calculate discount factors???????????

  • This topic has 5 replies, 6 voices, and was last updated 13 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • September 24, 2011 at 5:27 am #49903
    nadir
    Member
    • Topics: 71
    • Replies: 43
    • ☆☆

    If the discount rate is 10% , how do we calculate the discount rate of the next 5 years????

    Thanks in Advance

    September 26, 2011 at 4:25 am #88353
    cuteleo110
    Participant
    • Topics: 7
    • Replies: 385
    • ☆☆☆

    already answered in F7 forum..

    September 29, 2011 at 3:27 pm #88354
    Nisai
    Member
    • Topics: 1
    • Replies: 4
    • ☆

    100USD in five year = 100USD/(1.1 * 1.1 * 1.1 * 1.1 * 1.1) today

    October 4, 2011 at 10:24 pm #88355
    naumaniqrar
    Participant
    • Topics: 2
    • Replies: 1
    • ☆

    With the help of discount rate we present value of money.
    for example if we have 10% discount rate and we want to calculate present of 1000$ in two year.
    solution:- 1000*(1+0.10)^(-3) =751.315
    10% =0.10
    present value of 1000 in 4years?
    solution:- 1000*(1+0.10)^(-4) =683.01

    October 6, 2011 at 6:58 am #88356
    Anonymous
    Inactive
    • Topics: 0
    • Replies: 1
    • ☆

    In calculating Discount Factor,the below formular can be applied
    P*1/(1+r)^n where r=rate, n=number of years and P=principal.So for example if you want to find the value $500 in 3years time,then it will be =500*1/(1+0.1)^3=
    500*0.75=$375.66

    October 27, 2011 at 12:57 pm #88357
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    Small error in naumaniqrar’s post – he has said “in two years” but his calculation is for “in three years”

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