## About This Tool

The online Discount Factor Calculator is used to calculate the discount factor which is the factor by which a future cash flow must be multiplied in order to obtain the present value.

## Discount Factor Calculation Formula

The discount factor is calculated in the following way, where P(T) is the discount factor, r the discount rate, and T the discretely compounded over time:

P(T) = 1 / (1 + r)^{T}