This discount factor excel template can be a useful tool for analysts when creating financial models. The discount factor is a decimal figure used to discount a cash flow back to its present value. The discount factor increases over time (which means the decimal figure becomes smaller) as the compounding effect builds over time. The formula for calculating the discount factor is as follows: Discount Factor = 1 / (1 x (1 + Discount Rate) ^ n) Where: Discount Rate = Weighted Average Cost of Capital (WACC) n = Number of Periods The discount factor is another way to compute the NPV of cash flows besides using the XNPV function in Excel. While it might not be the fastest approach, it allows analysts to analyze the effects of compounding on each individual cash flow in a discounted cash flow (DCF) analysis. If you’d like to see more examples beyond this discount factor excel template, make sure to check all the Financial Model templates on CFI Marketplace.  
Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
REIT Financial Model Template
This REIT financial model template acts as a guideline for modeling a real estate investment trust (REIT). This model will…
Energy Industry Comps Template Energy Industry Comps Template
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
See All