Online calculator for calculating the coefficient discounting allows you to get its value for each planned period, based on the following source data:
- time step of calculation – month, quarter or year
- calculation horizon – number of periods during which cash flows are estimated
- discount rate – risks
Using the calculated coefficients, it is possible to discount any cash flows with the conclusion of an objective assessment of the economic effect of the analyzed event (in particular, the investment project).
The calculation of the discount coefficient by months and quarts is carried out taking into account the specified annual discount rate (discount rate), reduced to the corresponding period (for the month, the annual discount rate /12, for the quarter - the annual discount rate / 4).
Do not confuse the discount rate with rate !
With the help of calculated discount coefficients, it is possible not only to bring the future amount of money to its current value, but also vice versa - to determine the amount of money in the future that will be comparable to today's value.
This need may arise when it is necessary to calculate future lease, leasing and depreciation payments, which should take into account inflation and other risks that are embedded in the discount rate, through the calculation of compound interest from period to period (capitalization).
When bringing the future value of money to the current one, the future cash flow is multiplied by the coefficient of a certain period (for example: 1200*0,99; 1200*0.98; 1200*0.97 etc.), and when determining the future value of money comparable to the current, the cash flow is divided intocoefficient (for example: 1200/0,99; 1200/0.98; 1200/0.97 etc.).
Example of calculation using the calculator ’’’
It is necessary to calculate the discount rate for each planning period based on the fact that the calculation horizon for the project has been adopted for 7 years.
The average annual discount rate (discount rate) is adopted at the level of 5%.
The calculation should be made in the context of each year.
Fill out the form in accordance with the above data and make the calculation.
