With the discounting factor (or also Abzinsfaktor or Discount Factor) from a final capital the bar value is determined.

We assume that we have this yearly 1 euro at the end. Then it is today (now) less worth, because we yielding interest put on it.

What is today worth a euro, which lies in t years on our account, if he were put on to a interest rate by

Today's value = test specification = 1 (1+K) ^t * C (Present VALUE) C = capital (capital) K = interest rate (interest guess/advise) example: K = 10%t = 5 JahreC = 1 Eurot | Abzinsfaktor (with K = 10%)----------------------------------------1 | 0.909 <-- 1 (1 + 0.1) ^12 | 0.826 <-- 1 (1 + 0.1) ^23 | 0.751 <-- 1 (1 + 0.1) ^34 | 0.683 <-- 1 (1 + 0.1) ^45 | 0.621 <-- 1 (1 + 0.1) ^5PV = 1 euro * 0.621 = 0.621 euro

See also: Aufzinsfaktor

Articles in category "Discounting factor"

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Related Websites

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• Discount - Wikipedia, the free encyclopedia
  The discount factor', P(T), is the number by which a future cash flow to be received at time T must be multiplied in order to obtain the current present ...


• Discount - Wikipedia, the free encyclopedia
  The discount factor', P(T), is the number by which a future cash flow to be received at time T must be multiplied in order to obtain the current present ...


• Present Value
  The discount factor 1 / ( 1 + i ) t may be calculated for a range of time periods and interest rates and tabulated for quick reference. ...