Discount Factor Calculator

Work out discount factor instantly with clear inputs, formula shown and shareable results.

About Discount Factor Calculator

A discount factor converts a future sum into today's money. It is simply v^n = 1/(1+r)^n, and multiplying any future cash flow by it gives the present value that would grow into that cash flow at the same rate.

Formula

Discount factor

v^n = 1 / (1 + r)^n; PV = FV × v^n

r: Rate per period
n: Number of periods

Worked example

With the default values below, Discount Factor Calculator returns Discount Factor (v^n) of 0.680583. Change any input above and every figure here is recalculated in your browser.

Inputs used

Future Amountminimum 0: 10,000
Discount Rate Per Periodaccepts 0–100 %: 8 %
Number Of Periodsaccepts 1–600: 5

Results

Discount Factor (v^n): 0.680583
Present Value: $6,805.83
Value Lost To Discounting: $3,194.17
Present Value As % Of Future Amount: 68.058%

Step by step

1Values used
2Discount factor
3Discount Factor (v^n)= 0.680583
4Present Value= 6,805.83
5Value Lost To Discounting= 3,194.17
6Present Value As % Of Future Amount= 68.058

Assumptions and limits

The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 6 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why is the factor always below 1?

Because money available today can earn interest, a pound arriving later is worth less than a pound now.

Does the period have to be a year?

No. Use the rate per period that matches your periods — monthly rate with months, quarterly rate with quarters.