Discount factor formula for period is a mathematical equation in finance that calculates the present value of a future cash flow or a series of cash flows. The discount factor is the ratio of the present value of a future cash flow to the future cash flow itself. For example, if you are planning to receive a payment of $100 in one year and the current interest rate is 5%, the discount factor would be 0.9524. This means that the present value of the $100 payment is $95.24.
The discount factor formula is an important tool in finance, as it allows businesses and individuals to compare the value of cash flows at different points in time. The formula has been used for centuries to calculate the present value of bonds, loans, and other financial assets. In recent years, the formula has also been used to value future cash flows in a variety of other settings, such as the valuation of real estate and the evaluation of public policy.