For example, to calculate discount factor for a cash flow one year in the future, you could simply divide 1 by the interest rate plus 1. For an interest rate of 5%, the discount factor would be 1 divided by 1.05, or 95%.

What is the discounting factor?

Discount Factor is a weighing factor that is most commonly used to find the present value of future cash flows and is calculated by adding the discount rate to one which is then raised to the negative power of a number of periods.

What is the Excel formula for discount factor?

So, discounting is basically just the inverse of compounding: $P=$F*(1+i)^-n. The discount formula can be written as P=F*(P/F,i%,n), where (P/F,i%,n) is the symbol used to define the discount factor.