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

This topic has 5 replies, 6 voices, and was last updated 14 years ago by MikeLittle.

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September 24, 2011 at 5:27 am #49903

nadir
Member

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

already answered in F7 forum..

September 29, 2011 at 3:27 pm #88354

Nisai
Member

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

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

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

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