Capital Budgeting-Discounting factor calculation

6916 views 1 replies

can any one help me ? ?  ??

How to calculate discounting factor on calculator while solving capital budgeting problem.

 

Replies (1)

1) The formula for discounting rate is 1/(1+r/100), where r = rate of interest

 

2)For Eg : If the discounting rate is 10%, then discounting factor  

for 1st year = 1/(1+10/100) = 0.9091

Simply speaking calculate 1/1.1 = 0.9091 on the calculator, then again press '=' on the calculator then you will get the discounting factor for the 2nd year = 0.8264, then agian press '=' sign and you will get discounting factor for the 3rd year 0.7513 and so on.

 

Regards,

Devendra


CCI Pro

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